Can A Creditor Violate The Automatic Stay?
After you have filed for bankruptcy, the automatic stay attaches according to the U.S. Bankruptcy Code. What is the automatic stay? The automatic stay is an injunction that stops creditors and debt collectors from moving forward with any actions in order to collect the debt you owe. The injunction can stop many different forms of debt collection. For example, it stops creditors and debt collectors from suing you to recover money you owe or moving forward with an existing lawsuit. It also prevents creditors from garnishing your wages or your bank account. The automatic stay even stops creditors and debt collectors from continuing to call or text you with requests for you to make a payment. In addition, the automatic stay prevents a mortgage servicer or lender from initiating or moving forward with a foreclosure. From the moment you file for bankruptcy, you have these protections with the automatic stay.
What happens if a creditor or a debt collector violates the automatic stay? In short, in any case where a debt collector acts in willful violation of the automatic stay, that creditor or debt collector will face sanctions. Our West Palm Beach bankruptcy attorneys can provide you with additional information.
Consequences of an Automatic Stay Violation
Under the U.S. Bankruptcy Code, in order for a creditor or debt collector to face sanctions for violating the automatic stay, it will be necessary to show that the creditor or debt collector has willfully violated the injunction. In other words, if the creditor did not receive notice of your bankruptcy filing and moved forward with a debt collection action, that creditor may not face sanctions. Yet when a creditor or debt collector has been informed about your bankruptcy filing and the automatic stay, any continued attempt to collect may result in sanctions.
What are sanctions? In most cases, sanctions will involve a fine from the court. In addition to a fine, the court may order the creditor or debt collector to pay for attorney’s fees, and for any resulting damages caused by their willful violation. Depending upon the circumstances, a continued attempt to collect debt following a bankruptcy filing also may violate other laws that provide consumers with various protections. Accordingly, you should seek advice from an attorney.
How can you let the court know that the creditor or debt collector has violated the automatic stay? Under most circumstances, you should simply tell your lawyer. Then, your lawyer will be able to inform the court of the willful violation of the automatic stay so that the court can sanction the creditor or the debt collector.
Automatic Stay Can Be Lifted in Some Circumstances
It is important to know that a creditor or debt collector can ask the court to lift (or remove) the automatic stay for their particular debt so that they can continue to collect. In order for the court to lift the automatic stay, the creditor or debt collector seeking this action will need to file a petition with the bankruptcy court.
Most cases in which the automatic stay is lifted are those in which a creditor files the petition to move forward with a foreclosure or repossession.
Contact a West Palm Beach Bankruptcy Attorney
Do you need assistance with your bankruptcy case? You should contact a West Palm Beach bankruptcy lawyer at Kelley Kaplan & Eller today.