One of my Chapter 13 clients came to me with complaints that a credit union listed in his bankruptcy as a creditor was sending him letters demanding payment of a debt already being paid through his Chapter 13 plan.
The credit union certainly knew of the bankruptcy because it had filed a proof of claim and had received monthly payments from the trustee for over three years.
We advised the client to wait until the credit union had sent multiple letters.
Then we filed a motion against the credit union for violation of the automatic stay.
What is an automatic stay?
The automatic stay protects debtors while they’re in bankruptcy from the continued collection of debts by their creditors.
We received an Order from the U.S. Bankruptcy Court in favor of our client.
The court’s Order states in part that,
“Congress intended the automatic stay to stop “all collection efforts, all harassment, and all foreclosure actions and prevent creditors from attempting in any way to collect a pre-peition debt.”
The Judge awarded our client $500 for every letter he had received.
Then awarded our attorney’s fees so our client had to pay nothing in attorney fees and got money from the credit union also.
The lesson here is that if you’re a bankruptcy client in either Chapter 7 or Chapter 13 please notify us immediately of attempts to collect a debt listed in your bankruptcy.
Keep your documents and phone logs as evidence.
The same is true for clients who have already received their bankruptcy discharge.
We can obtain the same kind of damages for discharge violations against creditors.
Especially those that continue to try to collect debts after a bankruptcy discharge has been granted.