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Capital One illegally sues customers after bankruptcy

When a consumer realizes they can no longer make their credit card payments, one of the wisest things they can do is file for bankruptcy before the debt gets completely out of hand. By nipping debt in the bud, a consumer can file for bankruptcy and emerge with a new understanding of their personal finances and a clean slate. Although bankruptcy leaves a mark on a credit rating, that mark goes away with time.

Some consumers, however, are learning that debt does not always disappear with bankruptcy as it should. One woman filed for Chapter 7 bankruptcy because she could no longer make minimum payments on a $15,000 debt to Capital One Financial. Her minimum payments had jumped from $300 to $750 each month and she could no longer handle that amount. Even after bankruptcy, Capital One sent her a notice saying that they were suing her for $15,000.

Capital One Financial is the 10th-largest bank in the United States, but does not outsource debt collection. Instead, Capital One employees are tasked with collections, but little is done to keep track of bankruptcy filings. It is illegal to sue someone for debts that have been discharged through bankruptcy, and many former customers are fighting back by suing the bank.

Another 35-year-old woman was sued by Capital One for her $4,266 debt that had been discharged. She, in turn, sued the band for ignoring the law. Capital One dropped the suit and asked the judge to throw out the former client's counter-suit. The judge refused.

In 2011, a court-appointed auditor determined that Capital One had pursued 15,500 "erroneous claims" of debts that had been discharged through bankruptcy. Capital One agreed to reimburse approximately 130 borrowers without admitting to any wrongdoing.

The irony is not lost to some, who point out that Capital One was saved from bankruptcy in 2008. It received a $3.55 billion bailout in the "Capital Purchase Program" that was funded by taxpayers.

Source: Tulsa World, "Capital One sues customers illegally," Phil Mulkins, Jan. 8, 2012

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