Violations of the Automatic Stay
The Bankruptcy Code is quite clear. As soon as your bankruptcy petition is filed in U.S. Bankruptcy Court, you are protected by the federal government. Creditors can no longer touch your assets. They can't even contact you.
Some creditors and third parties try to avoid these rules. They prey on debtors through threats, deception and shame in a last-ditch effort to collect on debts. If creditors or bill collectors violate the rules, you can initiate adversary proceedings.
Creditor Violations of the Automatic Stay of Bankruptcy
The automatic stay is immediately invoked upon receipt of your bankruptcy filing. Each creditor listed in your petition will be notified that you and your assets are off limits while your case is pending. Any collection efforts must stop. Any legal actions must stop. Any contact (phone, mail, e-mail, etc.) is forbidden.
- Common violations of the automatic stay include:
- Harassing phone calls to your home, family members or place of work
- Verbal threats of legal action or physical harm
- Swearing and abusive language
- Invoices, collection letters and demands for payment
- Filing lawsuits and injunctions
- Attempts to garnish wages or bank accounts
- Attempts to collect debts that have been discharged by the Bankruptcy Court
- Attempts to collect on debts previously paid or settled
- Negative reports to credit reporting agencies for debts discharged in bankruptcy or listed in a pending case
An adversary proceeding is a trial within your bankruptcy case. You can initiate adversary proceedings against a creditor or third party. The judge or trustee can also bring adversary proceedings against creditors if the court learns of violations.
After your testimony, the creditor or agent will be given an opportunity to respond to the alleged violation. If the creditor is found in violation of the automatic stay, the court can award your actual damages in addition to attorney fees and statutory penalties.
In the same action, you can seek monetary damages under the federal Fair Debt Collection Practices Act. The FDCPA applies to behavior of creditors prior to bankruptcy and after you have filed. Offenders can be fined up to $1,000 for each violation. You may also be entitled to recover actual and punitive damages, depending on the case.
An Example of Creditor Harassment
Bill and Melinda* have received abusive phone calls and e-mails from a business owner who claims they reneged on a service contract. After they filed for bankruptcy, the e-mails and phone calls continued, and a demand letter was sent to their home address. The creditor also made phone calls to Bill's workplace. The collection agent told Bill's assistant that Bill was a bankrupt and a spendthrift.
Both Bill and Melinda were unable to sleep as a result of the stress. Bill and Melinda's attorney filed an adversarial proceeding against the creditor, alleging violations of the automatic stay and the FDCPA. After a hearing, the judge awards Bill and Melinda money damages for the violation of the automatic stay and statutory damages for the creditor's FDCPA violations.
*Bill and Melinda are fictitious characters created to illustrate bankruptcy scenarios.
Contact Atlas Consumer Law online or call (312) 313-1613 about creditors who violate your bankruptcy rights. We will take aggressive action and represent you in adversary proceedings and FDCPA claims.
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