Protection Under An Automatic Stay

Filing for bankruptcy can provide many benefits to those drowning in their debts. One of the  most recognizable benefits is the protection from creditors and collection attempts. Once the bankruptcy petition has been filed, the court issues an order of automatic stay. This order legally prohibits creditors from contacting the debtor or making further collection attempts. If a creditor violates this order, they may face serious consequences.

Violations Of The Order

Even though creditors know and understand that violating the automatic stay is against federal law, many continue their collection efforts anyway. Most of the time the creditor is hoping to bully the debtor into paying outside of bankruptcy for fear of losing the debt repayment in the bankruptcy process.

If a creditor violates the automatic stay order the debtor maintains the right to notify the court of the actions and attempt to resolve the violation. In some cases, the court may award the debtor punitive damages. However, the debtor must be able to demonstrate that the actions of the creditor were (a) willful and (b) resulted in injury or distress.