Creditor Harassment Claims During Chapter 7 Bankruptcy

I understand some Chapter 7 trustees in Tampa, and maybe elsewhere, are asking some debtors at the creditor meeting if they have been subject to creditor harassment prior to filing bankruptcy. The question is being asked to see if the debtor could assert a claim under the Fair Debt Collection Practices Act. (FDCPA). If the debtor states that he was "harassed" the trustees are sending the information to a consumer attorney to evaluate a potential claim, and if the attorney finds there may be a possible FDCPA claim, the trustee can hire the same attorney to file an adversary complaint against the offending creditor within the bankruptcy court proceeding.

So who benefits from FDCPA claim in bankruptcy court? Not the debtor. The beneficiaries are the trustee, the trustee’s attorney who is entitled to statutory attorneys fees, and lastly, the creditors. If you were harassed in violation of the FDCPA prior to filing a bankruptcy your claim belongs to the trustee on behalf of the creditors. The trustee gets a commission on any money a defendant creditor pays as a result of a judgment or settlement. The trustee’s attorney gets a nice attorneys fee, the creditors share what’s left, and the debtor- the person who suffered the harassment- gets no money. What the debtor does get is the inconvenience of being dragged in to the trustee’s lawsuit as a material witness. Without the debtor’s testimony of harassment the trustee has no case and the trustee’s attorney gets no fee.

Harassment, like beauty, is in the eyes of the beholder- its very subjective. What may be creditor harassment to one debtor may be nothing more than diligent, yet polite, collection efforts by a creditor with a legitimate claim. If asked, and if you really feel you were subject of pre-filing harassment, then of course you must tell the truth during the trustee’s examination and report harassment. But, if you are less than sure you were harassed by your creditors before you filed bankruptcy, keep in mind who benefits from a harassment claim during the bankruptcy proceeding.

On the other hand, if a creditor harasses you in an effort to collect a debt after you have filed your bankruptcy in violation of the automatic stay, it is you, the debtor, who is entitled to a recovery of money damages from the offending creditor for the stay violation