The Automatic Stay of Protection and Discharge Injunction

By: Marshall G. Reissman Bankruptcy Attorney in St. Petersburg, Florida at The Reissman Law Group, P.A.
One of the advantages debtors receive when they file for bankruptcy is creditors can no longer seek to collect money from them. At the time a bankruptcy case is filed, an automatic stay of protection is put into place under Sec. 362 of the Bankruptcy Code, which prevents creditors from contacting debtors trying to collect on outstanding debt. When a creditor fails to abide by the Automatic Stay, the bankruptcy court has the ability to levy sanctions against the creditors for failing to abide by the Stay. Oftentimes a creditors will normally stop contacting debtors after receiving a phone call from the debtor’s attorney advising the creditor of the bankruptcy case information. When the creditor continues to violate the Stay, the debtor’s attorney can file a motion with the court and seek sanctions, including punitive damages and attorney fees.
This same principle applies after a debtor receives a discharge. Once a debtor receives a discharge, creditors are forever barred from attempting to collect a debt that was included in the bankruptcy. The same rules apply if a creditor violates the discharge injunction as if they violate the Automatic Stay. Usually, once put on notice, creditors will cease collection activity. It may take several attempts and some sternly worded letters, but creditors usually stop harassing debtors.
Then there are the exceptional cases.
Recently, Bank of America allegedly called a debtor over 30 times to collect a debt that was included in the debtor’s bankruptcy. Thirty phone calls is probably excessive in anyone’s book. Apparently a bankruptcy judge in the Middle District of Florida Ft. Myers Division also thought 30 phone calls was excessive. He sanctioned Bank of America for violating the discharge injunction and made the bank pay $12,500.00 for the debtor’s attorney fees and additional sums for the debtor’s emotional distress according to the Huffington Post.
The Automatic Stay and Discharge Injunction are no joke. If creditors fail to abide by the Bankruptcy Code, they may find themselves on the other side of the collection process.
Here is the link to the article on the Huffington Post.