Dear Action Line: I filed Chapter 7 bankruptcy as I could not make minimum payments on $15,000 in Capital One Financial credit card debt. The payment was $300 per month until they raised it to $750 per month! This I could not afford, so I filed bankruptcy. It wrote saying it was suing me for $15,000. What about bankruptcy court? – D.W., Tulsa.

“Personal bankruptcy” frees filers from debts owed to lenders and pursuit by debt collectors. Capital One Financial, the 10th-largest U.S. bank, one of the largest credit-card issuers and best known for its pitch, “What’s in your wallet?” ignored bankruptcy laws.

A Dec. 23 Wall Street Journal MONEY article (, says late in 2008, the bank was forced to write off $2.9 billion in uncollectible loans. When customers fall behind on payments, rather than outsourcing debt collection to professional debt collectors, Capital One relies on its own employees to make the calls but apparently makes little effort keeping track of bankruptcy filings.

In 2009, a 35-year-old Hawthorne, N.J., waitress concluded her Chapter 7 bankruptcy case and was sued by Capital One for $4,266 in credit-card debt that had been discharged in bankruptcy. She sued the bank for ignoring bankruptcy law, and Capital One dropped its suit. Capital One asked a bankruptcy judge to throw out her suit, but he refused.

This wasn’t the first time the bank had gone after its customers for debts discharged in bankruptcy, “even though the practice is illegal.” A court-appointed auditor concluded Capital One pursued 15,500 “erroneous claims” seeking money previously erased by a bankruptcy-court judge and 800 of those borrowers filed lawsuits or other legal actions against Capital One, the auditor said in a Dec. 6, 2011, court filing. Without admitting or denying wrongdoing, Capital One agreed to reimburse about 130 borrowers, lawyers and bankruptcy trustees for legal costs incurred trying to fend off Capital One.

Also in the Journal, “In 2008, a U.S. bankruptcy trustee in Massachusetts accused Capital One of illegally making 5,600 attempts to collect debts already discharged in bankruptcy.” Capital One was itself saved from bankruptcy in 2008 when it received a $3.55 billion taxpayer bailout in the Treasury Department’s “Capital Purchase Program.”

The U.S. Department of Justice’s U.S. Trustee Program (federal bankruptcy court), announced a conclusion Jan. 18, 2011, The program is the DOJ component protecting the integrity of the bankruptcy system overseeing case administration and litigating to enforce bankruptcy laws. “The auditor’s report to the bankruptcy court, after examining 700,000 claims by Capital One, found it ‘erroneously filed’ 15,500 claims for $24.7 million for debts previously discharged in bankruptcy. The bank received $2.35 million on 5,100 of those claims. Refunds to affected consumers or bankruptcy estates will be based on amounts paid to it as a result of such claims. Reimbursement of attorneys’ fees and costs will be based on amounts paid by consumers to counsel or cost incurred by the bankruptcy trustee to object to Capital One’s erroneous claims. Affected consumers and bankruptcy trustees will receive further information from the auditor. Consumers and bankruptcy trustees need not take further action.”

This is a great piece and highlights your right in bankruptcy and the promise of a fresh start.