For many of our clients, the automatic stay is the best thing that has happened to them in a long, long time. In fact, in my opinion, there is no other provision of the law that can do more good for an individual more quickly than the automatic stay.
The Automatic Stay
So what is the automatic stay? It is really central to everything we do in bankruptcy. My partners and I have blogged on the topic several times. In a previous post, I noted “On the day a bankruptcy petition is filed, in fact at the very moment the petition is filed, the bankruptcy court enters an order called an automatic stay. The order is entered pursuant to the provisions of section 362 of title 11 of the United States Code. It constitutes a directive by a federal judge to each and every creditor of the consumer to immediately stop any and all collection activities. This means that the creditor(s) must cease collection calls, collection letters, lawsuits, garnishments and even foreclosure proceedings.” Gail Donaldson referred to it as your “circle” of protection. Amy Tanner noted that the “practical effect…. of the automatic stay is of utmost importance to anyone seeking relief from creditor harassment, repossession of personal property or foreclosure of real property.”
Creditor Violates the Automatic Stay
So what happens if a creditor violates the automatic stay and continues with collection activity when it knows, or should know, that the person from whom it is collecting has filed for bankruptcy? Quite simply, the creditor is in violation of a court order and can be made to pay the person damages. At Bond & Botes, we believe in protecting our clients from abusive creditors and often file complaints against creditors for violating the automatic stay. Frankly, there is little that I do as a bankruptcy attorney that I enjoy more that handing a check to one of my clients from a collector who we have made pay for attempting to collect a debt after a bankruptcy has been filed. Our clients have often been harassed and degraded by these collectors and it can be very uplifting when we make the collector pay money for its wrongful conduct.
Proving the Violation
Please note as I stated above that it must be shown the collector had knowledge of the bankruptcy filing in order to prove a violation of the automatic stay. It is thus very important that folks seeking bankruptcy protection work closely with their attorney to provide proper names, addresses and account numbers for their creditors. We want to be able to demonstrate that the creditor received notice of the bankruptcy filing. In some instances, a debt is transferred from one collector to another shortly before the bankruptcy filing and collection calls come from someone who was not listed. This does not necessarily stop us from suing the collector for violating the automatic stay. In some cases we can show that the collector should have known about the bankruptcy filing. It is enough if the person who has filed bankruptcy merely tells the collector that he or she has filed bankruptcy. If the collector calls again having been notified of the bankruptcy filing then it is in violation of the automatic stay. In other cases, we can show that the collector subscribes to one of several electronic bankruptcy notification services. If it does and failed to properly check for a bankruptcy filing before attempting to collect from someone in bankruptcy than it may have violated the automatic stay.
If you have filed bankruptcy and continue to receive calls from a collector, you should notify your bankruptcy attorney and ask him to help you seek compensation from the collector for its violation of the automatic stay. At Bond & Botes, we take these type violations seriously and will help you seek damages from a collector when it violates the provisions of the bankruptcy laws. Please contact us if you need help.
Brad Botes is a principal of each of the Bond & Botes Law Offices throughout Alabama, Mississippi, and Tennessee. He holds a Bachelor of Science from the University of North Alabama, and a Juris Doctorate from Cumberland School of Law at Samford University. He and his team of bankruptcy lawyers have spent over 30 years guiding people through financial challenges. Read his full bio here.