Category Archives: Bankruptcy

What Is The Automatic Stay?

The automatic stay is imposed, well, automatically,

Automatic Stay Stop Debt Collection
Stop Sign

upon the filing of any bankruptcy petition.

It is a big red STOP! sign to ALL creditors that debt collection actions, garnishments, foreclosures, repossessions, letters, phone calls, anything, must stop.

Most courts can issue a stay, an order freezing things where they are, after a lawsuit is filed, and there is notice to everyone, and a hearing.

In bankruptcy, the stay is automatic.  With electronic filing,

the bankruptcy court is open all the time, 24/7.

It takes a while for the court to mail the official notices to creditors, but I always notify any lawyer or creditor who is chasing my client, as soon as I file the case.

Action taken in violation of the automatic stay can be, and usually is, undone.

The automatic stay can be lifted by the bankruptcy court, after a motion and notice to the interested parties.

The stay does not apply to some actions, like child support, but, contact an expert if you have a question on this issue.

What Happens When A Creditor Violates The Automatic Stay?

I’m glad you asked me that.

The automatic stay is an order of the bankruptcy court, which has the authority to enforce its order, by assessing damages, even punitive damages, and, attorney fees.

Bank of America found out the hard way (again) this week.

In further fallout from the worst acquisition in U.S. corporate history, Bank of (everything in) America’s purchase of Countrywide Mortgage, they royally screwed up handling a mortgage.

Bank of America started a multi-year “dual-tracking” game of cat-and-mouse. With one paw, Bank of America batted the debtors between about twenty loan modification requests or supplements that routinely were either “lost” or declared insufficient, or incomplete, or stale and in need of re-submission, or denied without comprehensible explanation  but without prejudice to yet another request. With the other paw, Bank of America repeatedly scheduled foreclosures.

The created their problem by continuing, even increasing, their collection actions, even after the mortgagors filed bankruptcy.

BOA committed at least six further automatic stay violations by the end of August 2010 as it bulled forward, including ordering that the eviction of the Debtors begin.

On several occasions, BOA, with knowledge of the automatic stay, caused its agents to enter the Debtors’  gated community, sometimes on false pretenses, and lurk about the  home. Without identifying themselves, they staked out the premises, tailed the Debtors, knocked on doors, knocked on windows, and rang doorbells, all to the terror of the family.
The court concluded that the actual stay violation damages are $1,074,581.50. The appropriate punitive damages are $45,000,000.00.

Hopefully, this will deter creditors from violating the automatic stay.

But this provision of the law was enacted in 1979, so, if they haven’t learned by now, well . . . .

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More “Debt Relief” Lawyers Shut Down

The Consumer Protection Finance Bureau (CPFB) nailed some debt relief lawyers for FRAUD in tricking consumers into parting with their money for “debt relief.” Which turned out to relieve them only of their money and enrich the debt relief lawyers in the firm. What Is Debt Relief? Debt relief lawyers, and other scammers, use scareContinue Reading

More Debt, More Debtor Harassment

More consumer debt always leads to more bankruptcy filings. Does more debt lead to more debtor harassment? The November data are in, and, yes, consumer debt, that month of big Christmas shopping, went way up. Having read the latest Consumer Protection Financial Bureau consent judgment against a debt collection law firm, I wonder if there isContinue Reading

Bankruptcy and Interest Rate Increase

The Fed increased interest rates 25 basis points,   that is, .25%, and, the banks followed along. Lots of consumer credit is tied to “prime” rates set by banks. Which uniformly go up when the Fed raises its rate, which is why the Fed raises that rate. How Much Consumer Credit Is Tied To PrimeContinue Reading

Thankful For Bankruptcy

thankful for bankruptcy

Sure, I am a bankruptcy lawyer, why would I not be We all should be, not just us insolvency professionals.. Why Thankful for Bankruptcy? Because, in short, bankruptcy is good for the economy. Because, starting over is a good thing to be able to do when a business fails. Or a consumer. Walt Disney isContinue Reading

Home Bankruptcy Exemption In Michigan

If you file bankruptcy, you want to know if you can keep your home.  You want to know, what is the home bankruptcy exemption? Home Bankruptcy State Exemptions In Michigan Michigan has home exemption choices for folks who file bankruptcy here. Tenancy by entireties is available as one option. That is a fancy legal termContinue Reading