The Automatic Stay

by Paige Wright

When you file a bankruptcy case, an “automatic stay” is put in place that legally protects you from any creditor attempting to collect money from you.  The automatic stay prevents creditor from calling yuo on the phone to collect money from you, sending you collection letters, suing you, and initiating or continuing garnishments of wages or bank accounts.  Normally, creditors are respectful of the automatic stay and will cease collection efforts as soon as they receive notification of your bankruptcy.  But, what happens if a creditor continues to harass you even after your bankruptcy case is filed?

Recently, a Licata Bankruptcy Firm client was continuing to be harassed by a creditor after their case was filed.  The creditor was repeatedly contacting the client and threatening to repossess property even after the creditor had been notified of the bankruptcy case filing.  The creditor’s actions were clearly a violation of the automatic stay and were causing the clients emotional distress.

In order to protect its clients from further harassment, the firm filed a Motion for Sanctions against the creditor.  A Motion for Sanctions is a request for the court to enter a judgment against the creditor for violating the automatic stay.  In this case, the firm requested that the creditor be required to pay its clients money for continuing to harass the clients after the case is filed and to pay attorney fees associated with the time associated with preparing and prosecuting the motion.

After hearing testimony from the clients and argument from the attorney, a federal bankruptcy judge awarded the clients $1,250.00 for the repeated violations of the automatic stay and $1,000.00 in attorney fees.

Filing bankruptcy will get you a fresh start.  No matter how aggressive creditors may be before your case is filed, they can be financially penalized for attempting to collect money from you after your case is filed.  If you are being harassed by a creditor or a collection agency, a free consultation will allow an attorney to assess your situation.

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