A debt, once discharged through bankruptcy, is no longer owed. However, the consumer going through bankruptcy can ask that some debts, such as a car loan or other secured debt, be reaffirmed. Some debtors, wishing to maintain a relationship with a credit card issuer – such as a credit union – will also ask to reaffirm that debt.
This is done through a specific, court-approved agreement. By reaffirming, the debtor becomes legally obligated to pay all or part of an otherwise dischargeable debt.
If this is done through the court system, your subsequent good payment record on that debt will be reported to the credit bureaus and you will “get credit” for on-time payments and begin to rebuild your credit scores.
Unfortunately for some debtors, the urge to repay certain debts because of a moral obligation remains strong. Following that urge, they begin making payments on a debt that has been discharged – believing that any time they are unable to make payments it won’t matter, because they no longer legally owe the debt.
This is not the case, and there are two good reasons for not resuming payment.
• Your payments will probably not be reported to the credit bureaus, so they will not help you rebuild your credit scores.
• The act of making payments on a debt constitutes an informal reaffirmation of the debt – thus the obligation shifts from one of personal morality back to legal obligation.
Moral obligation is also an effective tool used by unsavory debt collection agencies to collect on debt that has been discharged in bankruptcy and/or debt that has become uncollectible through the statute of limitations. (These predators also use morality to coerce family members into paying debts for the deceased.)
This claim, however, is false. No matter what moral obligation you may have felt toward your original creditor, you have no moral obligation to a collection agency that has purchased that debt for pennies on the dollar in the hope of getting you to repay their investment many times over.
The telephone solicitors they hire are very good at what they do – and are often able to convince people, either through obligation or fear, to make a payment. This is the worst thing they could do, because it not only informally reaffirms the debt, it resets the statute of limitations.
Under the statute of limitations, a creditor is no longer allowed to sue for collection after a set period of time – typically 4 years from the last payment or your last use of credit.
That legality does not stop collection agencies from filing suit against you, failing to serve you with court papers, and gaining a judgment – even on a debt that was discharged 20 years earlier. Remember – these agencies pose as legitimate business, but actually operate as crooks.
Should this happen to you, you’ll need to contact the credit bureaus with proof that the debt was discharged in bankruptcy.
