How To Handle Automatic Stay Violations
When you file for bankruptcy, an automatic stay immediately goes into effect. This is a huge benefit to debtors—it will stop all collection activities, immediately and in their tracks. That includes everything from collection lawsuits to simple calls or letters attempting to collect a debt. It can even temporarily stop foreclosures and evictions.
Not all collection activities are halted by the stay. Things like child support can still be collected, as can some government fines. And, in some cases, creditors can ask for permission to collect after the stay is imposed—but they’ll need to specifically ask and receive that permission from the bankruptcy court.
Creditors know not to contact you because they will get notice of the filing of the bankruptcy. Of course, much of this depends on you getting the proper information about the identity of your creditors to your attorney so that your attorney can file the proper paperwork with the bankruptcy court.
If you are contacted by a creditor after filing, and it is immediately after your filing, it’s possible the creditor just hasn’t gotten notice of the case yet. If you get a collection call, simply tell the creditor that you have filed for bankruptcy, and provide your case number to them (your bankruptcy attorney will give you the case number for your case). Once the creditor knows you have filed for bankruptcy, most creditors will immediately stop all collection activities.
If it is more than a few days after you have filed for bankruptcy and you are continuing to get collection calls and letters, it is possible that the creditor was left off of the list of creditors in your bankruptcy paperwork. Double check, or ask your attorney to double check, to make sure the creditor was included.
Sanctions For Stay Violations
You should always tell your attorney about collection attempts from creditors made after you file your bankruptcy case. Your attorney will then notify the court.
The court will make a determination of whether the collection attempt was willful. If a collector collects on a debt even after knowing you filed for bankruptcy, the creditor’s actions will be considered willful. The creditor doesn’t have to intend to violate the automatic stay; the creditor only needs to intend to collect, despite knowing that you filed for bankruptcy.
Many times, creditors will ignore you when you tell them you have filed for bankruptcy, or else they won’t update their internal records even after being informed of the bankruptcy. When the collector does this, and keeps collecting against you, the collector is violating the automatic stay.
If the collection attempt is willful, the creditor can be severely sanctioned by the bankruptcy court. The creditor can be ordered to pay fines, attorneys fees or other monetary penalties.
Additionally, anything the creditor does in violation of the automatic stay is void, and can be “undone” or reversed by the bankruptcy court. This includes returning any property that may have been repossessed or foreclosed on in violation of the stay.