Question Is a collections agency payment plan dischargeable in Ch 7?

[Bob1968]

Hello:
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If a debtor enters into a payment contract with a collection agency, after originally defaulting on the credit card account before the agency purchased it, but then the debtor made no payments at all to the agency (and had no intent or ability to), would that debt still be dischargeable in Chap 7?
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(The reason I ask is that the agency can argue that the debtor contracted [with the agency] to pay a debt, with no intent or ability to pay)

[justbroke]

Absolutely. It would be discharged as "unsecured" debt. The agency can't "argue" anything when it comes to bankruptcy unless they have a secured debt. Even with a secured debt, that security may "impair" a legitimate debtor exemption on personal or real property. Very few debts are exempt from discharge and the few that are exempt are usually related to taxes, fines, restitution and others. If you're a creditor and not in one of those categories then the debt is subject to the discharge.

Every collection agency should and must know this. Intent means nothing because the fact that you're in a payment plan alone means you're insolvent.

Welcome to BKForum.

[despritfreya]

This debt is dischargeable unless and until the creditor files a Complaint under 11 USC 523(a) and, after a trial, the judge determines that you committed some sort of fraud. Until that happens there is nothing for you to worry about.

The real question is, based upon the facts, is it likely that the creditor will file such a Complaint? The answer depends upon all the facts (as the creditor sees them), the amount involved and how aggressive a creditor is.

Des.

[justbroke]

And there is what Des wrote. I don't see that too often though and especially for junk debt buyers (JDBs) and credit collection agencies. But, as Des writes, the amount could matter for an original creditor where you took on a bunch of debt and never made an attempt to pay.