Imagine going through bankruptcy and feeling the relief of beginning a debt-free life. Then one day you receive notice that a debt collector is suing you for debt that the bankruptcy court previously discharged. Does that sound like a violation of bankruptcy law? It is, and more and more debt collectors are doing it in Maryland.
That is why the Maryland Supreme Court is considering changing the rules so that debt collectors have to provide better proof that they can sue on the debt. In a story in the Baltimore Sun, debt collectors are buying accounts receivable and depending on debtors to not show-up in court to dispute the claim. One Maryland bankruptcy attorney said tens of thousands of Maryland cases end up in small claims court without proof.
It may pay to show up in court and dispute the debt. Maryland’s chief District Court judge said when defendants contest the lawsuit, the collectors usually dismiss the case because they know they will lose at trial. One debt collector sued a Maryland woman while she was in the midst of the Chapter 7 process – a clear violation of bankruptcy law.
The problem seems to be that when these companies purchase consumer debt portfolios, they are only buying the debtor’s name and the amount of debt owed. There is no regard for whether the debt is still valid or even if they are suing the correct person.