If you are in debt and have decided to file bankruptcy, one of the protections that you are primarily seeking is the automatic stay, which stops creditors from contacting you about your debts or making other attempts to collect them. Additionally, once your bankruptcy has been completed, you hope to receive a discharge of your debts, which relieves you of the legal obligation to repay your debts.
Although most creditors stop contacting you concerning the debt owed once the automatic stay or discharge of debt are in effect, a few of them may intentionally or unintentionally fail to do so. Fortunately, in such cases, you have legal rights and recourse.
Once the automatic stay is in effect, all your creditors must stop making collection calls or pursing foreclosures, repossessions, lawsuits and other tactics to collect the debt owed. If the creditor violates the stay by taking back collateral that secures a debt (e.g. a car repossession), you have the right to petition the bankruptcy court for relief. Under the law, the court has the power to order any property unlawfully taken to be returned to you.
Additionally, even if no property was taken, you have the right to seek compensation from the creditor who violated the stay for all types of stay violations (e.g. illegal collection calls or lawsuits). Under the law, if the creditor knew or should have known that the stay was in effect when he or she violated it, you may recover any actual losses you suffered as a result of the violation plus attorneys' fees. In extreme cases, you may also be entitled to recover punitive damages and compensation for emotional distress.
Creditors that violate the stay can also face court sanctions for contempt, since the stay is a court order. This may involve the creditor paying significant fines and court costs.
Once you have finished bankruptcy and received a discharge order, you no longer have to repay the pre-bankruptcy debts covered by it. Unfortunately, some creditors may attempt to contact you or otherwise goad you into repaying these debts in violation of the discharge.
In such cases, like the automatic stay, the creditor has violated a lawful court order. Because of this, you are empowered to petition the bankruptcy court to hold the creditor in contempt. In addition to fines and court costs, the court may award you attorneys' fees and compensatory damages for the losses you have suffered.
An attorney can help you
The bottom line is bankruptcy courts take a dim view of creditors violating its orders during and after bankruptcy. As a result, if you have been contacted or harassed by a debt illegally, it is important to take steps to assert your rights under the law. An experienced bankruptcy attorney can ensure that the errant creditor is held accountable for its illegal activities.