ACA International Statement on the Buying and Collecting of Bankrupt Debt


(MINNEAPOLIS, November 7)—ACA International, the Association of Credit and Collection Professionals, takes the following position on practices described in the November 12 BusinessWeek article, “Prisoners of Debt.”


ACA International opposes any collection activity on debts discharged through bankruptcy. The law clearly prohibits collection on such accounts from the filing date, during the automatic stay period, and after the date of discharge. ACA members are clear that the automatic stay on collection activities takes effect immediately upon a bankruptcy petition filing. The association is adamant about this point. Since 2004, we have lobbied to amend the bankruptcy code to require the court to notify collectors—as they do now for creditors—when a consumer’s case is filed. This notice would help prevent collectors from inadvertently requesting payment on a debt that is included in a bankruptcy filing.


Our 5,500 members include creditors, collection agencies and debt buyers. We work diligently to train our employees and to ensure our business practices are ethical, professional and legally compliant. ACA members “scrub” accounts through nationally known databases to remove any bankruptcy filings. None of our members wants to waste time, resources and expenses pursuing accounts we cannot legally collect. Our members cease all collection activity if we are notified that we have inadvertently pursued a bankrupt debtor.   


Access to bankruptcy relief must be preserved for those facing insurmountable debts. Americans recognized long ago that providing a fresh start is extremely important to society. Bankruptcy ensures our right to a second chance, while also protecting the creditor’s right to what was owed. The balance hinges on using bankruptcy appropriately and only as a last resort.


Today it’s increasingly common for creditors to use the sale of debt in the management of their receivables. Used appropriately, this tool is vital to the credit system and must also be preserved. ACA members do not buy or sell accounts where debtors have obtained a discharge.


ACA maintains that no responsible company would adopt the business practice of collecting discharged debts. Any attempt to deceive consumers into paying a debt they do not legally owe violates the laws regulating the industry, including the Fair Debt Collection Practices Act (FDCPA).


Creditors, collectors and debt buyers routinely list delinquent accounts with a consumer reporting agency. Reporting delinquent accounts is essential to the credit granting process. Accurate credit reporting protects consumers’ access to credit and allows businesses to assess risk. 


Credit reporting is subject to the Fair Credit Reporting Act (FCRA) and must be done accurately and timely. In addition, ACA’s Code of Ethics requires members to uphold the veracity of the consumer reporting system by updating or correcting reported information at their first available opportunity.


The FCRA allows an account discharged in bankruptcy to be listed on a consumer report for up to seven years—but it must be reported as discharged in bankruptcy and reflect a zero balance. Deliberately reporting a debt discharged in bankruptcy as a valid obligation is indefensible. If the error was inadvertent, the data furnisher should work to resolve the issue to the satisfaction of the consumer.


Our credit and collection members are ethical and professional. The deceptive practices reported in the BusinessWeek story have no place in the credit and collection industry. The existing bankruptcy code, the FDCPA and the FCRA are consistent and unequivocal about this fact. Any violation of these statutes is the extremely rare exception and does not represent today’s ethical and professional collection industry.


ACA will continue working with policymakers and industry leaders to clarify the rights and responsibilities of consumers, creditors, collectors and debt buyers for the benefit of each party in a credit transaction.


ACA International, the Association of Credit and Collection Professionals, is the comprehensive, knowledge-based resource for success in the credit and collection industry. Founded in 1939, ACA brings together more than 5,500 members worldwide, including third-party collection agencies, attorneys, asset buyers, creditors and vendor affiliates. The association establishes ethical standards, produces a wide variety of products, services and publications, and articulates the value of the credit and collection industry to businesses, policymakers and consumers. For more information about ACA International, visit


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