What to Do If a Creditor Violates the Automatic Stay?
You have several options if a creditor continues its collection actions against you in violation of the automatic stay.
Tell the creditor about your bankruptcy. Typically, informing the collector of the bankruptcy protection will cause the collector to correct its violation. Many times the collector is unaware of your case (through error or negligence) and will stop collecting and correct its violation. For instance, if a collector garnishes your wages after the bankruptcy case is filed, it must immediately return the money.
Notify the bankruptcy court. If the collector does not stop and correct its violation, the next step is to notify the bankruptcy court. The court can sanction the collector for violating its automatic stay order if the collection action is “willful.” The action is willful if:
The automatic stay order was in force and was actually violated
The collector knew of the bankruptcy case and either ignored the court’s order or failed to immediately correct its action after learning of the bankruptcy case, and
the collector intentionally acted.
A violation of the automatic stay does not depend upon the collector’s intent to violate the stay order, only that the collector intended to start or continue collecting in violation of the order.
Normally, the court can assent a violation of the automated keep under its power of ridicule (because the lender breached the court’s order). The court can enforce fines, evaluate attorney’s charges, and also get the collection agency to pay problems. Compensatory damages are not readily available.
File a lawsuit. If a collector continues to collect violates the automatic stay, it may also violate other state or federal laws including:
- State unfair trade practice laws
- The federal Fair Debt Collection Practices Act
- State fair debt collection practices laws, or
- The Fair Credit Reporting Act.
- In order to collect penalties or damages under another law, you’ll have to file a separate lawsuit.
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