What Are My Options if a Creditor Harrasses Me to Pay a Debt after I File Bankruptcy?

Sure, people rarely want to file for bankruptcy relief, but if you’re drowning in debt, bankruptcy can be a wonderful solution to your financial struggles. One of the greatest aspects of bankruptcy protection is the “automatic stay” which kicks in the minute you file a bankruptcy case. It’s called an automatic stay because it’s a stay – or stop to – almost all types of collection actions, and because it’s automatic – there’s no additional court order needed. As soon as you file bankruptcy, you get this “order for relief” and – with limited exceptions for child support, maintenance and criminal matters – everyone to whom you owed money must leave you alone. And in my experience, creditors who receive proper notice of a bankruptcy case actually do leave you alone 98 or so percent of the time.

So what happens when the creditor doesn’t stop demanding you pay a debt? Or if they try to foreclose on your home without court permission, or won’t lift a wage garnishment? In these cases, you can ordinarily file an Adversary Proceeding (essentially a lawsuit) in your bankruptcy case seeking damages for any harm caused to you by the illegal acts, including attorneys fees. In certain cases, you can even recover punitive damages, which are a monetary penalty imposed by the court when a creditor has “recklessly disregarded” your rights under federal law. Fortunately, because 11 U.S.C. sec. 362(k) says money damage awards, including attorneys fees, “shall” be awarded for stay violations, your attorney can often prosecute the case without any retainer, or without much of a retainer, because attorneys fees can be awarded by the court or can be included in any settlement with the creditor.

If you live in the Denver area and are considering filing a chapter 7 or 13 bankruptcy, you may want to discuss the automatic stay with any attorney you consider hiring to represent you. Have they ever sued a creditor for automatic stay violations? What’s their approach to deciding whether to sue a creditor? What process do they use to ensure your creditors will receive appropriate notice of your case, so that they can’t use a loophole in the law to avoid liability for stay violations? At The Law Office of Andrew S. Trexler, we take alleged violations of the automatic stay very seriously. While not every technical violation of the automatic stay deserves a lawsuit in response, we firmly believe creditors who ignore the stay should be held to account, and have recovered damages for  numerous clients who were illegally harrassed to pay a debt. Other local attorneys make stay violation litigation a part of their practice as well, but if you’re looking for an attorney who can handle all your bankruptcy-related needs, make sure they take stay violations seriously and will fight for your rights when necessary.

Andrew Trexler

More on our bankruptcy litigation practice