What Can You Do When a Creditor Violates the Automatic Stay Enacted by Filing for Bankruptcy?

One of the main reasons people choose to file for bankruptcy is because it creates an automatic stay. This is the legal restriction placed on creditors to stop contacting you about the money you owe them. Though there are many benefits to filing for bankruptcy, many people finally choose to take action to end the constant harassment by creditors and to put a hold on actions, such as foreclosure, that are in progress.

Unfortunately, not all creditors abide by the restrictions of the automatic stay. Whether on purpose or by accident, it is possible for you to be contacted even after an automatic stay is enacted. Most of the time, contact is made after an automatic stay due to timing or ignorance. For one reason or another the creditor does not realize an automatic stay is in place and continues collection efforts as usual. Very rarely is an automatic stay out-right ignored – penalties for intentionally ignoring an automatic stay are steep and most creditors know this.

When Does the Automatic Stay Occur?

An automatic stay goes into place the moment you file for bankruptcy. However, this doesn’t mean your creditors are aware of your automatic stay immediately. In some cases, it could take a week or two for them to receive notification, though it is possible for them to find out sooner if they are already registered with the court or subscribe to a service that notifies them automatically.

One you file, notification is generated and sent to the creditor identifying you as the borrower and explaining what they can and cannot do now that an automatic stay is in place. Chances are you will continue to receive calls and collection letters in the interim, before the creditor knows they must stop.

What Happens If a Creditor Violates the Automatic Stay?

If you do receive contact from a creditor once you file, you should inform them of the automatic stay, with your case number and the name of the bankruptcy court handling your case. If calls continue beyond the first time you give them this information, you have a right to take action against the creditor. Most of the time larger lenders know the risk of contact and will stop, but there are some smaller lenders who ignore the risk or do not realize how severe a penalty there is for their actions.

The penalty for violating an automatic stay varies depending on what the creditor has done and whether their actions were deliberate. When the debt includes property, the creditor risks having to return the property to the debtor and compensate him or her for any damages suffered due to the violation, such as attorney’s fees, pain, and suffering.

If you believe a creditor has violated the automatic stay in your bankruptcy, you need to contact your bankruptcy attorney immediately. He or she can advise you on how to proceed.

And if you are considering bankruptcy and would like to speak to someone, or you believe an automatic stay could aid you in dealing with your situation, we want to help. Contact the Law Offices of Robert M. Geller at 813.254.5696 to discuss your situation and to learn how bankruptcy can help you.