When your finances are in dire straits, filing for personal bankruptcy can be your best option. The idea in doing so is to alleviate your poor financial situation, whether it is because of credit card debt, unpaid loans or simple mismanagement, by converting non-exempt assets to cash to pay whatever you can to your creditors.

Filing personal bankruptcy is supposed to stop anyone from trying to collect anything beyond the agreed upon debt owed according to the provisions of the bankruptcy court's order. But according to several lawsuits filed against Capital One, that might not have been the case.

According to the suits, Capital One has been accused of attempting to collect credit card debt in excess of the amount agreed to in many individuals' bankruptcy cases. If the allegations prove true, this would constitute an illegal attempt to recoup money from people who have already had their debts discharged in the bankruptcy process. Capital One proclaims innocence, stating that any such attempt to collect debt was "neither willful nor intentional."

Some people are not convinced the collection practices were unintentional, isolated incidents. David W. Houston III, chief judge of the U.S. Bankruptcy Court in Mississippi, is among those skeptical of Capital One's proclamation of innocence. Judge Houston want proofs that the practice is simply an error and not a conscious effort to collect money that a person is no longer responsible for repaying.

No matter whether you are in Baltimore or living on a private island, your debt will catch up with you somehow. Due to the profitability of debt collection, unscrupulous tactics sometimes are employed to harass and coerce people into paying back money owed on those debts. There is simply too much money to profit from by the collectors for them not to try settling these outstanding claims. The most glaring example of improper debt collection tactics are those that are used against people who have made every effort to do the right thing and pay what they could.

There are laws in place to prevent abuses by debt collectors, but it is important to remain vigilant and continue to cry foul against those who continue trying to take advantage of people who are already down on their financial luck.

Source: Wall Street Journal, "Debts Go Bad, Then It Gets Worse," Jessica Silver-Greenberg, Dec. 23, 2011