One of the big problems consumer attorneys face when they try to make creditors obey the bankruptcy discharge or properly report a consumer’s credit after bankruptcy, is that much of the evidence has disappeared. Unfortunately, to prevail in a lawsuit you have to produce credible evidence to the court or jury and without it a remedy that should be available is not. This is tragic as creditors often get away with flagrant violations of the law!

Persons who have filed bankruptcy should be aware that creditors are not allowed to contact them once the case is filed. If contact does occur it should documented carefully and reported to your bankruptcy attorney. We often are called upon to file adversary proceedings to stop creditors from violating the automatic stay or the discharge injunction. In order to prevail in these actions we must prove the creditor contacted the debtor in an effort to collect the debt. So, it’s important that letters received are kept, telephone calls recorded or, at least the pertinent information about the call written down. So, often when a client calls about a violation they can’t tell me who they talked to, the date and time of the call, or what exactly was said.

It’s even worse in credit reporting cases. To prove damages here we need specific information about damages such as credit denials, increased interest rates charged, as well as documentation of mental distress suffered on account of the creditor’s illegal behavior. So often we have to settle a case for far less than it’s worth simply because a consumer has thrown away critical evidence or neglected to keep track of all the damages that has been suffered on account of the creditor’s malicious conduct.

Here are some simple things that every consumer who files bankruptcy should do once their case is filed:

Keep all correspondence from creditors received after bankruptcy

Record all telephone calls from creditors after the case is filed. Simple recording equipment can be purchased at Radio Shack.

If creditors call after the case is filed get their name, name of their company, the identity of the creditor they represent, how much they say is due, and the reason for the call. Note the date and time of the call. Don’t argue with them or hang up on them until you have this information. Once you have this information tell them you’ve filed bankruptcy and give them your attorney’s name.

If a creditor calls a second time get all this information again so you can testify with confidence if the need arises. Also, note anything they say that is untrue, argumentative, slanderous, threatening, rude, or profane.

If you apply for credit and are denied, keep the denial letters that come in the mail. Also, try to get the creditor to tell you specifically what caused them to deny you credit. Often it will be the erroneous information on your credit report. Ask them what would have to be removed from your credit report for them to extend you the credit you requested.

If you receive offers of credit upon favorable terms but when you apply they want to charge you more interest or give you less favorable terms, keep the documentation of the original offer so you can prove what you lost when the original deal was lost.

Often consumers suffer extreme mental anguish, embarrassment, fear and humiliation when credit is denied. This can result in insomnia, headache, muscle ache, high blood pressure and a wide variety of other ailments. To get mental anguish damages, however, requires proof. Documentary evidence from doctors, medical providers, and pharmacist is needed if the consumer seeks medical attention. Even more critical, however, is a daily diary of all of the emotions, anxieties and physical symptoms suffered each day from the date the creditor's misconduct occurs. If a consumer has this information at his fingertips it will provide him much confidence and add credibility when he tries to explain how he has been damaged by the creditors violation of the law.

Creditors are often angry when they have to write off a debt and often try to take advantage of debtors who may not understand the law. Understand your rights and make your ex-creditors obey the law. If you need help contact us.

In addition to practicing law William Manchee is also a novelist. Check out his work on his website. WilliamManchee.com

According the U.S. Bureau of Labor Statistics most new small businesses will fail within the first four years. That’s a sad fact, so it’s important to make sure if it happens to your small business that you don’t have any personal liability for the debts of the corporation, limited liability company, or limited partnership. If you’re a sole proprietorship or general partnership it won’t make any difference as these types of ownership don’t provide any liability protection to the owners. For an interesting story that clearly illustrates the idiocy of operating a business as a general partnership, read my novel, Cash Call, a legal horror story about a failed restaurant franchise.

Although operating as a corporation or limited liability company can protect the owners from personal liability, it’s not automatic. For example, a potential client recently came in complaining that he was being harassed by an old creditor from his bankrupt corporation. After quizzing him for awhile I learned that the creditor involved was the county and the debt was for personal property taxes. Ordinarily a corporate bankruptcy would have taken care of that liability but after examining the records I discovered the tax bill was in my client’s name. This was incorrect but since my client hadn’t got it corrected he had a problem. Even if he had filed a personal bankruptcy he still might not escape the debt since the claim of a governmental entity is a priority debt and not necessarily dischargeable.

So, it’s imperative that the small business owner carefully check every bill that comes in and make sure it is in the name of the corporation or LLC and don’t leave off the "Inc." or "LLC" on the name as that’s what protects you. If those three magic letters are left off there could be an assumption that the business is a DBA (doing business as) of the individual owner or owners.

Another problem is that many creditors insist on the owners guaranteeing their debt. Although the easy thing to do is to cave in and sign the guaranty, it’s a very bad idea. There are usually many vendors to choose from, so it’s usually not hard to find one who won’t insist on a personal guaranty. Banks and landlords are more difficult, but if you shop around and let these creditors know there won’t be any personal guarantees many times these creditors will back off. Remember, creditors will always try to get as much collateral and as many personal guarantees as they can, so stand your ground.

To find out more about what can go wrong in a small business and what to do about it, check out William Manchee’s new non-fiction book, Go Broke, Die Rich, Turning Around the Troubled Small Business. Go Broke, Die Rich and Cash Call are available in paperback, audio MP3, and for audio download at Audible.com.　

What can you do when the lights go out, the landlord locks you out, the IRS attaches your bank account or some other catastrophic event occurs. Do you fold up your tent and start looking for a new job? Or are there ways to salvage the business you have worked so hard to build and is your most precious asset?

Fortunately, most situations look a lot worse than they are. I often receive frantic calls from clients who think their world has come to an end. Faced with IRS garnishment, lawsuits, foreclosures, repossessions, or attachments, they feel like their world is collapsing around them and that all hope has been lost. One such case was an owner of a cab company who called me, frantic, one afternoon after the constable had just carted off everything in her offices.

She had made a fundamental mistake in ignoring a lawsuit that had been filed against her. It’s amazing how many entrepreneurs think that if they don’t pick up their certified mail or ignore a citation served upon them, that nothing will happen to them. This head-in-the-sand mentality is a sure ticket to disaster, as my client found out when the constable showed up with two big trucks to haul away all her personal property.

Running a cab company with no radio equipment or telephones is rather difficult, so it was critical to get everything returned immediately. I only know of two ways to accomplish that: pay off the judgment that is being executed or file a Chapter 11. Since my client was essentially broke, Chapter 11 was the only thing that we could do. Several days later our client’s property was returned and she was back in business.

The key to surviving any catastrophe is to keep calm and get professional help immediately. If it’s a medical emergency, you call an ambulance or go to the emergency room. When you get served with a lawsuit you should immediately call an attorney so that the matter can be defended. Don’t think you can be your own attorney. The law is very complicated and the procedure for prosecuting and defending lawsuits is very precise. An individual without legal training isn’t going to be able to put up an effective defense. One of my clients found this out the hard way.

One evening I was just pulling into my garage when my cell phone rang. I answered the call and it was a frantic SBO who had just had his business put into a receivership. A receivership is where a third party, appointed by the court, is placed into control of a business for the benefit of creditors. This usually ends up in the liquidation of the business or a Chapter 7 bankruptcy. This proprietor had been rather rudely put out of business.

When I asked him how it happened that he was put in receivership, he confessed that he had been sued and tried to defend the suit himself to save money. Unfortunately, the opposing counsel was a ruthless attorney who walked right over him in court and soon had control of his business. Receiverships are rather uncommon today, and had my client retained an attorney, he probably would have been able to successfully avoid the appointment of the receiver. Again, in this situation a Chapter 11 was the only way to stop the receivership and get this client back in control of his business.

When calamity strikes, the key to successfully dealing with it is to get an attorney immediately, identify your adversaries, weigh all the options available, and then pick an appropriate course of action.

Determining your adversaries is pretty easy as they are usually banging on the door. But sometimes adversaries aren’t aggressive and may not have made any noise yet. It’s important to do a complete analysis of all your creditors and contractual obligations to see what other potential claims there might be coming your way.

For instance, the immediate crisis may be an IRS garnishment of your bank account. Although this is annoying and will cost you whatever was in the bank account, it’s not a devastating blow. But if a business owner can’t pay his payroll taxes it’s a good sign he’s got other problems, too. The landlord may be about to lock him out or his vehicles may be in jeopardy of being repossessed.

Once you decide on a course of action, don’t delay it’s implementation. Time is always of the essence when it comes to defending yourself from attack. For instance, if you owe income taxes, the timing of filing your bankruptcy might be critical. Normally taxes are a priority debt but if they are more than three years old, they become an unsecured debt. It’s always desirable to have taxes classified as unsecured because that means they don’t have to be paid in full. Taxes, however, become secured if the government files a federal tax lien. Fortunately, the IRS usually isn’t too quick to file these federal tax liens, but once they do file them, the taxpayer will likely have to pay the full taxes, plus penalty and interest. This happened in a recent case when a client came to see us about a Chapter 7 bankruptcy. His only creditor was the IRS, and most of the taxes were over three years old. Unfortunately, he had waited several months to deal with the problem. After we had all the papers together and were about to file the bankruptcy, he got a notice that a federal tax lien had been filed. With a lien filed, the bankruptcy wouldn’t do him any good because the taxes were now secured by the equity in his homestead.

Another instance in which time is critical is with vehicles that are in danger of repossession. Often people wait until the repo man is stalking them before they contact us. A Chapter 13 usually solves this type of creditor problem, but it’s important to file it before the vehicle is taken. Once the car is gone, there is danger that it can be sold and lost forever.

Normally a bank or finance company only has to give a borrower ten days notice of a private sale. If the sale takes place before the Chapter 13 is filed, the vehicle may be lost. If it is still in the possession of the bank or finance company when the bankruptcy is filed, then it can’t be sold without court permission. This usually affords the borrower the opportunity to get the vehicle back but, if the creditor resists, another lawsuit or adversary proceeding, called a turnover, may have to be instituted. Of course, this involves time and money and may not be successful.

So the bottom line is that a small business owner should always react quickly to the first sign of trouble and deal with it quickly and effectively with professional help.

For more infromation about turning around the troubled small business read William Manchee's new book, Go Broke, Die Rich, available in paperback, eBook, and audio format.

      Over the years I have presided over the births and deaths of hundreds of small businesses. As an attorney, I have watched many of them grow, mature, and thrive, but I have seen many more stumble, fall, and die. 

      It is painful to see an entrepreneur, once so full of hope and excitement, suddenly desperate and defeated. I am saddened when I drive down the street and see an empty storefront, as I know someone has suffered an immeasurable loss, and endured extraordinary grief and pain trying to save their piece of the American dream.

      There are few experiences in life as painful and brutal as the failure of a small business. For a small business conceived and nurtured by its owner is like a living, breathing child. Its loss is no less traumatic than losing a loved one. After all, a business owner spends most of his waking hours at work. He will invariably become very attached to it, particularly if it is the business he loves and the one he has always wanted to pursue. 

      Inevitably the business becomes an extension of the owner himself. When it is ailing, he is ailing as well from stress and worry over whatever problems the business is facing. When the business is thriving, he will be happy, confident, and enjoying life to the fullest. If the business fails, the owner will feel like a failure and suffer deep emotional scars that will greatly impact his personal life for years to come.

      With business failure often comes marital strife and divorce. I don't claim to be a psychologist, but every day I see husbands and wives torn apart because one blames the other for a business failure. Or, if they don't blame each other, they are often so tired and battered from battling with creditors that they give up on the marriage. The sight of each other only brings back bad memories. So too often the unhappy couple opts for divorce. If the marriage does survive, it will never be the same.

      Having watched my small business clients closely over the years and having operated my own law practice, I have come to some conclusions about why some businesses succeed while others fail. The sad fact is that many of the businesses I have seen fail could have been successful. The good news is that it's not too late for those still in business, if they will wake up and take control of their destiny.

      In my new book, Go Broke, Die Rich, Turning Around the Troubled Small Business, ISBN 978-1-929976-9-59 http://tinyurl.com/7jv86fm, I explain these common causes of small business failure, how to identify them, and what can be done to defend the business while it is being turned around. 

      Don't get me wrong. This book doesn't contain any magical formula for success. Turning a business around requires hard work, discipline, and sacrifice. But what I hope this book will do is give the reader insight into why so many small businesses fail, and provide solutions and strategies that can help turn around an ailing business.

      This book is intentionally written in a simple, informal style for the average business owner rather than for college graduates or MBAs. I've found that the cause of business failure isn't just a lack of education, experience, or business training, but just as often a lack of common sense. Often small business owners, or "entrepreneurs"s as I call them in the book, do things they know are stupid and reckless. Why? Because entrepreneurs by definition are risk-takers. They like to experiment and do brash things that may only have a slim chance of success. They are the eternal optimist and often have unrealistic expectations.

      Although my major at UCLA back in the late 60s was political science, fortunately, I did minor in economics. The business courses I took were helpful to me when I started in law practice in 1976. More importantly, however, was the training I received at Metropolitan Life Insurance Company. While I was in law school I had to support my wife and four children, so I worked full time selling life insurance. This wasn't a glamorous job, but I did learn much about financial and business planning—something that had scarcely been mentioned in high school or college. 

      Go Broke, Die Rich is not intended to be a manual or reference book. It is my hope that it will be interesting, entertaining, and informative. I fear too many self-help books get stuck on a shelf and never read cover-to-cover because they are too much like a textbook. This book is about adversity and how to overcome it. Its full of practical advice and ideas on how to deal with just about every adversity an entrepreneur might face. 

       Go Broke, Die Rich is full of real life events that should be of interest to any small business owner. Obviously, the names and locations have been changed and the facts altered enough such that no confidences will be breached. Hopefully, the reader will be able to identify with the characters in these stories and understand the problems they face. The reader will, no doubt, be facing similar problems and can learn from the mistakes made by the business owners in these stories.

      As needed, I will provide legal and business advice but it will not be technical or hard to understand. It is not my intention to burden the reader with the complexities of the law, but simply to give them ideas and alternatives that will provide direction and avenues to take toward solving the problems encountered.

      I consider every business failure a tragedy and, when it is one of my clients who goes down, it is even more troubling. I often lie awake at night wondering if there was something else I could have done to save a client's business and spare him and his family the dire consequences of a business failure. My only hope is that this book will help other entrepreneurs save their small businesses.

      Visit my websites at http://williammanchee.com and http://mancheelaw.com.

     From the day you are born you are indoctrinated on how important credit is to everyone. You're told over and over again that good credit is the secret to financial success and happiness in life. You're barraged with advertisements for all the expensive luxury items you can buy right now on credit and nearly everyone takes the bait.

     You get a house you can't afford, a luxury car you don't need, and run up a half-dozen credit cards to the hilt. Before you know it you're a slave to the system. You’ve stepped into the credit trap. Most of your hard-earned money is going to banks and mortgage companies in interest payments. You pay and pay and pay, yet the balance you owe never goes down. For many the joy is soon gone—happiness is replaced with constant worry and depression.

     Yes, from the day we are born, each and every one of us have been carefully manipulated into becoming slaves. That’s right, carefully programmed robots who go to work everyday and then religiously send seventy to eighty percent of our wealth to our masters, the big corporate giants of Wall Street and the government bureaucrats in Washington.

     Think about it. From the day you are born you're told that good credit is your ticket to the American dream. You can have all the luxuries and modern conveniences of life on credit. Why wait, they say, when you can have it right now.

     Millions of Americans, including myself, have been victimized by this credit conspiracy. The lure of easy money is so tantalizing that few can resist it. I started my own law practice with a two-thousand dollar cash advance on my American Express card. I tried to get conventional financing but had no collateral, so I was summarily turned down. Over the years I continued to finance my small business with high-interest credit card debt that the average entrepreneur would have no prayer of ever paying off.

     A lot of small business are started and financed with credit cards each year this same way. A few will be successful and pay off this high-cost debt, but most will eventually perish because of it. Eventually the burden of the minimum monthly payments will get so heavy that the business will collapse.

     Credit cards are very handy and useful for travel and to make it easy to keep track of business expenses. But they shouldn’t be used for financing your business or covering your negative cash flow at home. If you are using credit cards for this purpose you need to stop immediately and take a close look at the business. Find out what is wrong and correct it, but don’t keep digging a hole that will eventually swallow you and your small business.

     So, now you’ve been warned, but will you do anything about it? Probably not. Credit cards are addictive just like cigarettes and booze. They provide immediate pleasure and allow you to fulfill your dreams. In your mind you’ve got everything under control. You tell yourself that you can stop using your credit cards whenever you want. So, why don’t you?

     What makes credit cards so dangerous is that, unlike booze, there is no immediate hangover to make you regret you your actions. The consequences of your indiscretions with your credit card are deferred for months or years. For awhile you can manage to make the minimum payments without too much struggle, but eventually all the minimum payments add up and you find yourself overwhelmed.

      The use of credit cards defies logic. Why would anyone pay 29% interest, late fees, over the limit penalties, and an annual membership fee, when the bank won’t pay you 2% if you buy a CD. It’s ludicrous. But when I point it out to clients they just shrug. It’s like their minds don’t compute when it comes to credit cards. Armed with a pocket full of plastic gods they become mindless zombies who have no idea what they are doing.

     I could understand it if they were desperate. Many of my bankruptcy clients over the years have turned to pawn loans, payday loans, title loans, or other legalized loan shark operations. Without giving it a second thought sign a note that provides or sometimes over 900% interest. What’s ridiculous is that the Truth-In-Lending disclosure is right there staring them in the face and they still sign on the dotted line. When you absolutely have to have money people will do whatever it takes no matter what the consequences are to get it.

     But people with credit cards half the time don’t need what they are buying. They are not desperate people who are buying food, clothing or gasoline to get to work. They are buying gifts they can’t afford to give, luxury items they could do without or booze and cigarettes that will eventually kill them. Nor are these people stupid. They are just as often college graduates as high school dropouts. The common threat among them is materialism and a lack of common sense. They like fancy cars, good food, designer clothing, the latest in technology and large well furnished homes. If they can’t have all these things they are unhappy.

      So, what is the answer to the credit card addict? Fortunately, it’s an addiction that can be easily ended. All you have to do is quit paying the credit cards. When you do this they soon will lose their magic and you will never buy something you don’t need ever again. Even better your credit score will crater so you won’t be able to get new credit cards to replace the ones you have lost.

     Of course, the downside of this solution is having to deal with all the angry collection agents who will start hounding you for payments on the now dead cards. They will threaten you will all kinds of horrible things like lawsuits, liens, garnishments, attachments, and even criminal prosecution. Of course, they can’t legally do any of this, but they will do their best to make you believe it will happen very soon if you don’t send them money. It may become so bad you will have to file bankruptcy just to get some peace, but bankruptcy is the worst thing for the credit addict.

     That’s right because as long as your credit is bad you will have no choice but to go straight. But once you file bankruptcy your credit will rebound quicker than you’d ever thought possible and then you’ll be right back where you started with a pocket full of plastic gods.

     So, rather than going through all of that, the better move for the credit addict is to simply cut up all the credit cards and pay them off as quickly as possible. This will be painful and require a lot of sacrifice, but it will be well worth it as it will free you from the financial shackles that have bound you from the moment you stepped into the credit trap.

     Lucky for me, attorneys often find themselves in a position to make the big score. For me it was a personal injury case that netted enough to pay off my credit card debt and the loan on my home, but it was only after struggling for twenty years that I finally escaped the credit trap and became debt free. For most entrepreneurs bankruptcy or death will be their only way out.

      The above article is from my new book, Go Broke, Die Rich, Turning Around the Troubled Small Business. http://amzn.to/zHe0hr For an entertaining perspective on credit cards read my novel Plastic Gods. http://amzn.to/zFrCH1 Visit my website at http://williammanchee.com.

Just finished drafting a lawsuit today for woman, I'll call her Mary Lou. She's a single woman who lost one of her two jobs she needed to make ends meet and got behind on her mortgage. She contacted her mortgage company and asked if they could do a modification. They said "no problem" we'll just roll the past due payments into the modified loan. So, she filled out the loan applicaton and sent them 27 pages of documents. A few days later she confirmed with them that they'd received the documents. Nothing happened for 45 days so she contacted them again and ended up talking to their India office and was told they couldn't find the application. She faxed it again and confirmed with them the next day that they got it. They told her it would take 30 more days to process. In the meantime she's getting farther behind on her mortgage.

Forty five days later she contacts them and she gets the same story---we can't find your paperwork. So, she faxes them 37 pages again. This time they say it will take 60 days to process. She confirms they got the fax and waits. A month later she contacts them again and can't get through to a person so she leaves several messages. Several weeks later she finally gets a later acknowledging her request for a modification and assuring her that it will be processed expeditiously.

There weeks later she tries to contact them again and they direct her to another agent in India. After many attempts she finally talks to a woman and is told they need more documentation. The client has trouble finding these documents but manages to send them in two weeks later. In the meantime she receives an acelleration letter and notice of foreclosure from a lawfirm. She tries to call the mortgage servicer to see what's up but only gets messages. A few weeks later she breathes a sigh of relief when she gets a letter from the mortgaging servicer assuring her everything is okay and they won't foreclose.

On the first Tuesday of the following month the mortage company forecloses and the home she's lived in for 23 years is sold for $50,000 more than the note. Mary Lou doesn't find out about it until a man walks up with eviction papers---she has 3 days to vacate!

Devastated, Mary Lou moves out to an apartment and has to trash two thirds of her belongings because they won't fit into her small apartment. She's broke, depressed, angry, humilitated and can't focus on anything. Her life has been ruined and she doesn't feel like even getting off the sofa.

What she doesn't realize, in addition to all the horrible injustices that have been inflicted on her, is that she's just been ripped off for $50,000. The lender had a duty to write her a check for the money they received from the foreclosure in excess of the loan principle plus the cost of foreclosure, but instead someone pocketed her money!

I wish this were an uncommon experience, but it happens every day, and it's not always simply gross incompetence, quite often it's intentional.

With so many Americans out of work and finding it impossible to keep up with their credit card bills, there has been a proliferation of debt negotiators out peddling their services.

Some of these debt negotiators are honest and sincere but many are not. Either way it is highly unlikely that they will be able to formulate a workable plan for many reasons. First if a consumer can't afford the minimum payments on his credit cards they won't have cash for discounted settlements nor will they be able to spare any income for long term payouts. Often debt negotiators will be overly optimistic and lead consumers into a plan that is totally unrealistic and only exacerbates their perilous situation.

The truth is many of these debt negotiators care little about the consumers they claim to be helping. Some are interested only in the nice fat fee they ask for upfront, others are funded by the credit card industry itself, and others have unrealistic expectations from the consumers they represent.

In my experience when you find yourself buried in debt there are only three options. One is to drastically increase your income. This is possible by getting a better job or taking on a second one. This isn't usually a realistic solution. A second option is to quit paying the debt and hiding from creditors. Many consumers take this second option, however, it isn't very satisfactory either as creditors will try to make their lives a living hell. The only sensible option for most is bankruptcy.

Many people delay filing bankruptcy hoping for a miracle. This delay usually only makes matters worse and subjects them to unnecessary stress and anxiety. Long term stress of this type can result in divorce and even suicide.

Bottom line, if a consumer is overhead in debt they should avoid debt negotiators and file bankruptcy without delay before their financial predicament scars them for life.

One of the misconceptions about filing bankruptcy is the belief that it will destroy the filer's credit. The truth is filing bankruptcy often will improve a persons credit and certainly, in the long run, be very beneficial to your credit score. Typically the bankruptcy filer will already have bad credit. Credit cards, medical bills, and installments loans are often behind or the debtor has quit making payments altogether. If nothing is done his credit will not improve for at least 10 years, and often longer since the ten years that adverse credit can remain on a credit report only starts when the customer quits making payments. Bankruptcy, however, often will be the beginning of a healing process. After much of a person's debt has been discharged, the person becomes a much better credit risk and his or her credit score will begin to improve, assuming the person is employed and doesn't run up a bunch of new debt after the bankruptcy.

This improvement in the bankruptcy filer's credit will only happen, however, if the creditors properly report the debtor's credit. Unfortunately, often this isn't the case. It's important to check your credit after bankruptcy to be sure the debt is listed as "discharged in bankruptcy" and a balance of "zero." If this isn't the case not only will the adverse impact of a bankruptcy be on your credit, but also all of your old blemishes that should have been removed. A consumer can dispute adverse credit themselves, but often creditors don't correct the adverse reporting. Your best bet is get professional help in the beginning. This shouldn't cost you any money as the law provides that attorney's fees are recoverable if it becomes necessary to sue a credit to force compliance with the credit laws.

We all know that when a debt is discharged in bankruptcy that’s the end of it, right? Think again. Creditors have a sack full of tricks to get consumers to pay debts that they don’t have any legal obligation to pay. In fact, there is an entire industry of debt buyers out there that most people don’t even know about. I’m not talking about the collection agencies, but companies and trusts that do nothing but buy and sell debt—some of it discharged. Obviously if they are buying the debt they intend to collect it. Below are a few of the ways it’s done.

1) Closing on a house or car. When your bankruptcy is over you will eventually need to finance a new car or buy a home. When you go to apply for a loan your loan officer will pull your credit and may tell you that you don’t qualify—unless you can pull up your credit score a few points. They suggest you contact some of your creditors that are negatively reporting on your credit report and settle the debt. You protest that the debt has been discharged but they just shrug. So, you take their advice, contact the creditors and pay off some of your discharged debt. What you were not told was the negative reporting should not have been on your credit report in the first place.

2) Several months after you bankruptcy discharge comes through you start receiving telephone calls or letters from a company you don’t recognize. You think perhaps you didn’t list them on your bankruptcy and are still liable for the debt or the collector says this debt isn’t discharged by the bankruptcy. It gets ugly from there on and you end up settling with them. What they don’t tell you is that they bought the debt from a creditor who was listed in the bankruptcy or that, in a no asset case which is the norm, an unlisted debt is still usually discharged.

3) After your bankruptcy is over you continue to pay an auto loan or home mortgage, although you don’t formally reaffirm that debt. Later on you get behind on the payments and the car is repossessed or the house foreclosed. Months later a collection agency comes along and tries to collect the deficiency. They tell you or you assume that you still owe the debt since you continued to pay on it after the bankruptcy is over. What they don’t tell you is that the debt is still discharged and usually not collectible. The creditors sole remedy, in most cases, is to take back their collateral and that’s it.

4) After your bankruptcy is filed some of your creditors will quit updating your credit report so they don’t have to report that their debt has been discharged. They hope you will voluntarily pay them later to improve your credit score. What you should know is that this trick called “parking an account” and you can dispute the account and make them update it without paying them a nickel.

With unemployment at an all time high and so many facing foreclosure, millions of Americans will be forced into bankruptcy over the next few years. They will be looking for a discharge of their credit card debts, medical bills, and mortgage deficiencies and the fresh start the bankruptcy code promises. Unfortunately, even if they successfully complete their bankruptcy filing and their debts have been discharged doesn't mean the fight against predatory lenders is over.

Many creditors intentionally misreport people's credit after filing bankruptcy and some will even continue trying to collect the discharged debt.You would think there would be someone in the government making sure creditors obeyed the bankruptcy discharge and the Fair Credit Reporting Act, but that's not generally the case. That task is largely left to the debtors themselves, which means most often nothing is done and the predatory creditor is allowed to continue to ruin the lives of innocent Americans.

We have all witnessed lender greed and corporate excess during the current economic meltdown and it's time we put an end to them.Fortunately there are a myriad of laws available to stop this type of abuse by the credit industry. The first is a contempt action in the bankruptcy court, the second are federal actions under Fair Credit Reporting Act (FCRA) and/or the Fair Debt Collection Practices Act (FDCPA), and the third are state court actions for defamation, unreasonable collection or violation of local fair collection laws.

Unfortunately, these laws are not utilized often enough to stop this type of abuse. Two of the reasons for this are ignorance on the part of consumers and residual guilt from the bankruptcy filing. They don't know what their rights are after bankruptcy and because they feel a little guilty over not paying their debts, they are not inclined to take action against the lender whose debt has just been discharged. What they don't know is that their creditors haven't necessarily given up getting paid and sometimes won't quit until forced to do so.