Your Rights When a Creditor Violates the Automatic Stay

What Are the Consequences? How Do You Protect Your Rights?

Your Rights When a Creditor Violates the Automatic StayOne of the key benefits of the American bankruptcy laws is what is legally referred to as the “automatic stay” This provision goes into effect immediately when you file a Chapter 7 or Chapter petition, and bans creditors from calling, writing or taking any other action, other than through the bankruptcy proceeding, to collect the debt. What happens if a creditor ignores the prohibitions of the automatic stay and harasses you to make payments?

The Consequences to the Creditor

Under the provisions of the U.S. Bankruptcy Code, the automatic stay remains in effect until the court has either entered an order lifting it (usually at the request of a creditor) or the final discharge order has been entered. A creditor may violate the automatic stay, either willfully or unintentionally. If the creditor can show that the violation was accidental (the creditor may not have internally processed the notice from the court before the violation occurred), there will typically be no sanctions, but the creditor will be warned not to engage in any further collection efforts. If, however, the violation can be shown to be intentional, willful or with knowledge of the existence of the automatic stay, the creditor may be required to pay actual damages to the debtor, which can include costs and attorney fees. In some cases, the bankruptcy court can even assess punitive damages, though such circumstances are rare.

What Must the Debtor Do to Recover Damages for Violation of the Automatic Stay?

The bankruptcy court will not initiate legal action against a creditor who has violated the automatic stay. The debtor must petition the court and must provide evidence supporting the claim.

Contact an Experienced Rockwall, TX Bankruptcy Attorney

Learn more about the reasons for reaffirming a debt in bankruptcy. At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.

Call Rockwall bankruptcy lawyer Carrie Weir at 972-772-3083 or fill out the contact from below for a free, confidential consultation to discuss your options.

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