THE BURNED OVER DISTRICT

But with their huge size, senior management can be safely shielded from the latest cheesy little fraud perpetrated on the American public.

In the netherworld of consumer debt, there are zombies: bills that cannot be killed even by declaring personal bankruptcy.

Tens of thousands of Americans who went through bankruptcy are still haunted by debts long after — sometimes as long as a decade after — federal judges have extinguished the bills in court.

The problem, state and federal officials suspect, is that some of the nation’s biggest banks ignore bankruptcy court discharges, which render the debts void. Paying no heed to the courts, the banks keep the debts alive on credit reports, essentially forcing borrowers to make payments on bills that they do not legally owe.

The practice — a subtle but powerful tactic that effectively holds the credit report hostage until borrowers pay — potentially breathes new life into the pools of bad debt that are bought by financial firms.

Now lawyers with the United States Trustee Program, an arm of the Justice Department, are investigating JPMorgan Chase, Bank of America, Citigroup and Synchrony Financial, formerly known as GE Capital Retail Finance, suspecting the banks of violating federal bankruptcy law by ignoring the discharge injunction, say people briefed on the investigations.

The banks say that they comply with all federal laws in their collection and sale of debt.

Still, federal judges have started to raise alarms that some banks are threatening the foundations of bankruptcy.

Judge Robert D. Drain of the federal bankruptcy court in White Plains said in one opinion that debt buyers know that a bank “will refuse to correct the credit report to reflect the obligor’s bankruptcy discharge, which means that the debtor will feel significant added pressure to obtain a ‘clean’ report by paying the debt,” according to court documents.

For the debt buyers and the banks, the people briefed on the investigations said, it is a mutually beneficial arrangement: The banks typically send along any payments that they receive from borrowers to the debt buyers, which in turn, are more willing to buy portfolios of soured debts — including many that will wind up voided in bankruptcy — from the banks.

Real people would be whacked big time with contempt of court if they ever tried to ignore rulings like this, but the big financial corporations as people have nothing to fear. The can sell worthless paper and assist in the fraudulent claims of the debt collectors for their profit and then profess total innocence because what they are doing is most definitely not in their process manual. And what individual can afford the time and place to deal with this corporate collusion?