January 20, 2020

$150 Automatic Stay Violation Results in $6,000 damages award

I read a very interesting case summary in the March 30, 2006 edition of the Consumer Bankruptcy News.  It described the Lisenby case from the Middle District of Alabama.

In this case, after the Lisenbys filed bankruptcy and after the Mrs. Lisenby advised the debt collector about the bankruptcy filing, the collection agency drafted $150 out of the Lisenby’s checking account.  This bank draft caused numerous bounced checks and bounced check charges.

The Lisenbys filed a Complaint for Violation of the Automatic Stay in Bankruptcy Court.  The collection agency failed to file a response.  Judge Dwight Williams held a trial to determine damages and found the collection agency liable for the bounced check charges, lost wages, $1,000 in punitive damages for wilful violation (the defendant never returned the $150) $2,644 in attorney’s fees and $1,000 for violation of the Fair Debt Collection Procedures Act – total damages were over $6,000.00

This reminds me of an automatic stay violation case I brought here in the Northern District of Georgia where a “buy here, pay here” car dealer repossessed my client’s car after the bankruptcy filing and did not return it until I had filed suit.  The judge in my case awarded almost $4,500 in damages even though the debtor had never made any payments on the car and even though the contract was a lease, not a purchase.

The big picture here – bankruptcy judges take the automatic stay very seriously.  Sometimes creditors, especially small companies who are not familiar with bankruptcy, do not recognize how important the automatic stay is treated.

Generally, if the creditor acts quickly to fix the problem, the courts will generally not award punitive damages.  But woe is the creditor who holds on to a car or who refuses to fix a problem despite notice.
So, if you have filed bankruptcy and a creditor takes action against you, you may very well have a significant claim for damages.

About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.

Comments

  1. How to file a voilation of Automtic stay?

  2. Kathleen:
    Some bankruptcy lawyers handle stay violation cases, while others do not. Start with your lawyer. If he/she does not handle stay violation cases, ask for a referral. Another source – the lawyer directory at http://www.bankruptcylawnetwork.com.

  3. I had to re-file for chapter 13 bankruptcy, after the first one was dismissed (we used an unlicensed document prep service who did not file documents in a timely manner). During the bankruptcy, two creditors violated the automatic stay, one by reposessing our car, even after we sent them a demand letter. My question is, because this was never dealt with in the first bankruptcy, can I file a motion for stay violation in this new bankruptcy?

  4. Elizabeth says

    I live in Georgia and has a home that was quit claimed to me. I filed a chapter 7 bankruptcy and the bank went ahead and foreclosed the day I filed bankruptcy although I faxed a copy of the bankruptcy. The bankruptcy was discharged in late April. At the hearing the trustee advised me to get an attorney because she saw where the bank had filed foreclosure documents on the original purchaser. The bank foreclosed in October 2008 and we are still in the home. They have not acknowledge the bankruptcy and have been trying to get us out through the State Court. Thank you.

  5. Theresa Baker says

    After more than a year of loss and devastation, we were advised multiple times by endless consumer advocacy organizations to file bankruptcy. We hated the thought, but finally got to where if we did not, we lose our home of 20 years that we lovingly built and raised our 4 children in.

    We interviewed a few attorneys, educated ourselves and proceeded with the filing of a chapter 7. We immediately enjoyed indescribable relief from harassment from our creditors-EXCEPT for our mortgage servicer. They have continued to violate our automatic stay in an escalating fashion. They have denied us access to HAMP until our bankruptcy discharges, but threatened us that if we don’t bring it more current, we will be put immediately into foreclosure. Our attorney seems unconcerned about the violations and so we fearfully waited for our 341 hearing-still ahead of us.

    After being mailed a notice that if “we didn’t bring the account current in 15 days we would be foreclosed on” we immediately called and then asked to (again) apply for HAMP which they repeated (this time on a recorded phone call to convince my attorney that I was being truthful) that we could not apply for HAMP until AFTER our bankruptcy dishcharged (which is in 6-8 weeks). Obviously a no-win for us, and we have asked for a voluntary dismissal of our bankruptcy so we can fight to save our home, which is all we have left.

    We now will have all of our debt reinstated, plus huge fees presumably, and be banned from bankruptcy for atleast 6 months for not showing up at the 341 hearing. We asked our attorney to file a motion for voluntary dismissal without prejudice, but he said that would cost an additional $500 dollars, which of course we don’t have. We said we would then file ourselves and he said we could not because we were being represented by him. We have no other way to stop the bankruptcy than to be a “no show” at our 341.

    THIS is why people are failing. We are being victimized from every side, and this is our reward for being tax paying, excellent credit public servants for 30 years… Now we are unworthy. It’s appalling. It seems to me, that my mortgage company is causing me great harm in violating my stay: I was going to have all of my debt extinguished and begin again. Not now.

  6. Giovanna Gambino says

    @Theresa Baker:

    I 100% agree with you! Very similar situation I am experiencing.

  7. Sara Jones Ricks says

    Hi,

    Hope all is well. I am currently in bankruptcy and my pay-here pay-here used car dealership has disabled my car. As a single-mother of two minors who not only works full-time but also cares for my disabled mother and attend college, not having a car has posed significant inconvenieces for all of us. I was wonder, isn’t the dealership in violation of the automatic stay protection? Please advise.

  8. Sara, you need to ask this question to your lawyer. Hopefully the federal circuit case law that sets precedent for your filing district has ruled on this matter.

  9. I am private mortgage lender. We are in the process of foreclosure. Needless to say there is a bankruptcy case. My attorney never for a relief from stay and just found out that he proceeded with the foreclosure. I am now in a rush in finding a new attorney. I am worried about the damages his actions will have on me.

  10. Frances, I think that you are wise to get new counsel. My guess is that your new lawyer will advise you to stop the foreclosure process, come clean with the bankruptcy court and take steps to restore the debtor to his pre-foreclosure position, you will get an equitable result regarding damages. Good luck.

  11. I am in chapter 7 bankruptcy open case. I filed adversary hearing discharge student loans as well. I was in repayment plan when I filed bankruptcy. My loan is Federal. ECMC listed my loan as default and reported major delinquent to credit. ECMC doesn’t list the loan payments on payment history nor the repayment agreement. Do I have a case violation of stay? This default and report to credit has caused damage to my credit that I am trying so hard to rebuild with this bankruptcy.

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