What Happens if You Voluntarily Pay Discharged Debt?
When you file for bankruptcy, some of your debts can be discharged. That means you’re not liable for paying the remaining balance on specific loans. Additionally, creditors and/or lenders are prohibited from attempting to collect on the balance or taking legal action against you to recover funds.
Although you are no longer obligated to make payments on a discharged debt, bankruptcy does not completely erase the amount you owed. The creditor would still have your loan on their books, often taking a loss for the remaining balance. In some cases, they may sell your account for a lesser amount or charge it off.
Choosing to Make Voluntary Payments
Recognizing that some creditors might be hit with a loss because of your bankruptcy filing, you might feel morally obligated to voluntarily make payments on the remaining balance. For instance, the discharge may have included money you borrowed from a relative, a loan you have a cosigner on (a creditor can still attempt to collect money from a cosigner if you filed for bankruptcy, but they didn’t), or a bill from a medical provider that you want to keep visiting. Rather than breaking ties or creating strained relationships with these individuals or companies, you can choose to voluntarily make payments even after the debt has been discharged.
Federal Bankruptcy Law
Under 11 U.S.C. section 524(f), you can pay any creditor or lender you want. Specifically, the law states that “nothing contained in subsection (c) or (d) of this section prevents a debtor from voluntarily repaying any debt.”
Negative action cannot be taken against you for voluntarily sending money to a lender. Your discharged debt won’t become reactivated nor can creditors resume contacting you to collect funds or bring legal action.
Before Making Voluntary Payments
It’s important to contact the companies you’re planning to begin repaying before sending funds. They may have closed the account or sold it and might not have a record any longer, which means your money could be sent to the incorrect place. You might also be restricted in how you can make payments, and you may need to find out if you can submit online or if you must mail in a check.
Contact Albaugh Law Firm Today
If you’re considering paying a discharged debt or are thinking about filing for bankruptcy, speak with our skilled attorney as soon as possible. With over 70 years of combined experience, we know the intricacies of these processes and can help you understand your options.