Can You Sue Original Creditors to Erase Unsecured Debt?

What is the name of your state? CA

I’ve just recently heard about a friend of my husband who had someone sue his creditors, in small claims court, and they removed all of his debt. Is this possible? I have been doing much research about it and haven’t been able to find something that exactly matches what he claims happened. Is this the same as debt settlement/validation or can debt validation only be used with collection agencies? I copied a sample lawsuit template from the CreditNet website, but I’m not sure if this is what I’m supposed to use. Can you please let me know if this is true or if I should get my head out of the clouds?

[cmorris]

Originally Posted by bizpro7

What is the name of your state? CA

I’ve just recently heard about a friend of my husband who had someone sue his creditors, in small claims court, and they removed all of his debt. Is this possible? I have been doing much research about it and haven’t been able to find something that exactly matches what he claims happened. Is this the same as debt settlement/validation or can debt validation only be used with collection agencies? I copied a sample lawsuit template from the CreditNet website, but I’m not sure if this is what I’m supposed to use. Can you please let me know if this is true or if I should get my head out of the clouds?

Suing is a LAST resort. Usually, this only happens IF the debt is not yours, you have proof of a pay for delete, the CA cannot validate (and won't put in dispute on CR), etc. Before even considering court, you MUST have a paper trail.

What is the debt, when and where was it incurred, and has the CA violated the FDCPA? What have you done about this debt?

[Ladynred]

Judging by your description of that person's 'method' , this is one of those bogus 'debt erasure' scams. They do NOT work, they are pure bull and based on premises that just don't stand up in court. Forget debt erasure or debt elimination scams, they are meant only to put money in the pockets of the people selling their 'secrets'. The ONLY true and legal 'debt erasure' is bankruptcy.

[Ladynred]

I don't know that its really a contradiction. By definiton:

The discharge has the effect of extinguishing the debtor’s personal liability on dischargeable debts.

The definition of 'debt' in the Bankruptcy Code is "(12) ''debt'' means liability on a claim;"

Reading further in Section 524 Effect of Discharge:

Section 524 - Effect of Discharge
SENATE REPORT NO. 95-989
Subsection (a) specifies that a discharge in a bankruptcy case voids any judgment to the extent that it is a determination of the personal liability of the debtor with respect to a prepetition debt, and operates as an injunction against the commencement or continuation of an action, the employment of process, or any act, including telephone calls, letters, and personal contacts, to collect, recover, or offset any discharged debt as a personal liability of the debtor, or from property of the debtor, whether or not the debtor has waived discharge of the debt involved. The injunction is to give complete effect to the discharge and to eliminate any doubt concerning the effect of the discharge as a total prohibition on debt collection efforts. This paragraph has been expanded over a comparable provision in Bankruptcy Act Sec. 14f (section 32(f) of former title 11) to cover any act to collect, such as dunning by telephone or letter, or indirectly through friends, relatives, or employers, harassment, threats of repossession, and the like.

So, to your question of semantics - bankruptcy relieves you of your personal LIABILITY for all discharged debts and the permanent injunction of the discharge is an absolute prohibition against any creditor ever doing anything to collect on a discharged debt.

So, since the law says you have been relieved of all liablity for those debts AND prevents any means to collect on them, the debts are, for all intents and purposes, wiped out. Since creditors cannot ever collect, they must write the debts off, take their tax write-off, and forget about it.

It can be argued that you technically still OWE the debt, you've just been relieved of your LIABILITY for it and since creditors can't ever come after you for it, the debt is effectively, erased - its even be reported as ZERO OWED on your credit reports.