Does It Matter If A Creditor Intended to Violate The Automatic Stay?
By Peter Orville, Attorney at Law on May 31, 2008 in Automatic Stay, Bankruptcy Cases of Interest, Bankruptcy Practice and Procedure, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Collection Issues, Debt Collector Abuses, Decisions of Interest, Discharge Violations, General Bankruptcy Information, New York
When debtors attorneys file motions against creditors who violate the automatic stay, creditors often try to argue that they did not intend to violate the stay. If that is their only argument…they lose.
Last October, Nicholas Ortiz wrote on these pages about what is required to show that a creditor violated the automatic stay. http://www.bankruptcylawnetwork.com/2007/10/12/what-are-the-elements-of-a-debtor%e2%80%99s-case-for-violation-of-the-automatic-stay/ One of the five requirements he noted was that the creditors’ actions were in willful violation of the stay.
What does it mean to be in “willful violation” of the stay? Jay Fleishman discussed that here last year http://www.bankruptcylawnetwork.com/2007/10/07/when-creditors-violate-the-automatic-stay-oops-they-did-it-again/ . Jay noted that the creditor needs to know - or have reason to know - that the bankruptcy was filed, and needs to take some collection action after the case was filed. The “willful” part refers to their willfully sending the notice or making the phone call. There is no need to prove that they intentionally violated the stay.
Last year, in the Northern District of New York, in In re Sullivan, Bankruptcy Judge Stephen Gerling joined bankruptcy judges around the country when he held that “A willful violation of the stay does not require specific intent to violate the stay”. Other courts have similarly held that any deliberate act taken in violation of a stay, which the violator knows - or should know - was in existence, justifies an award of actual damages.
Next - What are the duties of a creditor once they have been informed of the bankruptcy filing?
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