Can a Creditor Violate the Automatic Stay and Take Collection Actions Against Me?
Are you considering a bankruptcy filing? You should know that, as soon as you file for bankruptcy, the automatic stay will apply to your case. The automatic stay is an injunction that stops creditors or debt collectors from continuing with any existing collection actions against you and initiating any new collection actions against you. As such, the automatic stay is extremely powerful. If you are planning to file for bankruptcy, you might be wondering: can a creditor violate the automatic stay and take collection actions against me?
There are only limited circumstances in which a creditor or debt collector does not have to abide by the automatic stay (which we will explain below), but otherwise, a creditor or debt collector cannot violate the automatic stay. Our West Palm Beach bankruptcy lawyers can provide you with more clarification.
Understanding the Automatic Stay
The US Bankruptcy Code is clear when it comes to the automatic stay, defining it as “an automatic injunction that prohibits most creditor collection activities after the debtor has filed for bankruptcy,” that “begins at the moment the bankruptcy petition is filed.” The automatic stay puts a halt to ongoing actions like wage garnishments, foreclosure proceedings, lawsuits, and more. It also stops a creditor from initiating one of these actions.
Automatic Stay Cannot Be Violated Unless Court Lifts the Stay
Generally speaking, creditors do not typically ask the bankruptcy court to lift the automatic stay. However, there are circumstances in which a creditor might move to have the automatic stay partially lifted for them. In other words, the automatic stay will not be lifted altogether, but it will be lifted for a certain creditor who requests it. Usually this is a secured creditor, such as a mortgage lender, that wants to move forward with a foreclosure proceeding.
Yet even when the court does agree to lift the automatic stay for a specific creditor, it is essential to know that other creditors must still abide by the automatic stay (in other words, it is still in effect for all other creditors). Further, a creditor who has the automatic stay lifted for them cannot take any action until the court officially approves lifting the automatic stay. Taking any collection-related action prior to then will constitute a violation of the automatic stay.
What Happens When a Creditor Violates the Automatic Stay?
When a creditor willfully violates the automatic stay, that creditor can be sanctioned, which can result in damages and attorneys’ fees and damages. If you have filed for bankruptcy and a creditor violated the automatic stay, you should seek help from a bankruptcy lawyer as soon as possible.
Contact Our West Palm Beach Bankruptcy Attorneys Today
The automatic stay is a crucial element of bankruptcy protection for any debtor who files a bankruptcy petition in Florida. Indeed, debtors should be able to expect that the automatic stay will prevent creditors or debt collectors from moving forward with ongoing debt collection actions or initiating new actions short of court permission that involves a partial lifting of the automatic stay. If a creditor or debt collector has violated the automatic stay in your bankruptcy case, or if you have any questions or concerns about bankruptcy, an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller can help. Contact us today for assistance with your bankruptcy case.