I read a very interesting case summary in the March 30, 2006 edition of the Consumer Bankruptcy News. It described the Lisenby case from the Middle District of Alabama.
In this case, after the Lisenbys filed bankruptcy and after the Mrs. Lisenby advised the debt collector about the bankruptcy filing, the collection agency drafted $150 out of the Lisenby’s checking account. This bank draft caused numerous bounced checks and bounced check charges.
The Lisenbys filed a Complaint for Violation of the Automatic Stay in Bankruptcy Court. The collection agency failed to file a response. Judge Dwight Williams held a trial to determine damages and found the collection agency liable for the bounced check charges, lost wages, $1,000 in punitive damages for wilful violation (the defendant never returned the $150) $2,644 in attorney’s fees and $1,000 for violation of the Fair Debt Collection Procedures Act – total damages were over $6,000.00
This reminds me of an automatic stay violation case I brought here in the Northern District of Georgia where a “buy here, pay here” car dealer repossessed my client’s car after the bankruptcy filing and did not return it until I had filed suit. The judge in my case awarded almost $4,500 in damages even though the debtor had never made any payments on the car and even though the contract was a lease, not a purchase.
The big picture here – bankruptcy judges take the automatic stay very seriously. Sometimes creditors, especially small companies who are not familiar with bankruptcy, do not recognize how important the automatic stay is treated.
Generally, if the creditor acts quickly to fix the problem, the courts will generally not award punitive damages. But woe is the creditor who holds on to a car or who refuses to fix a problem despite notice.
So, if you have filed bankruptcy and a creditor takes action against you, you may very well have a significant claim for damages.