Actual & Punitive Damages for BK stay violations

[Pandora]

What a nice surprise - logged onto PACER to see if anything has changed and what do I find? A lawsuit done by our lawyer for blatant BK violations from a creditor Whats he seeking? Well - it says:

"actual and punitive damages pursuant to Section 362 of BK code......... in the form of actual damages; statutory damages, punitive damages, legal fees and expenses of attorney, the underlying debt or part thereof be forever canceled and discharged, and such other and further relief as the Court may deem necessary and proper."

So given they violated it 4 times and all exhibits were provided proving that - does that mean its $1,000 per violation - and does that cover what is referred to "actual, statutory, punitive" or could it be more than that?

Wow - wasnt sure our attorney would file it or not - but so glad he did! Per our agreement we split any $ awarded 50/50.

[lrprn]

I wish more bk lawyers were willing to go after creditors who openly violate the automatic stay. Keep us posted how the lawsuit progresses. Good luck to your lawyer and to you!

I'm curious - if you do get a monetary award and your Ch 13 is not 100% payback and is still active when the award is in hand, can your trustee take your 50% for your creditors? Did your lawyer share with you how that might turn out?

[Pandora]

Thanks lrprn - I wasnt sure if he was going to go after them or not, he had mentioned it a while ago but I hadnt seen anything until yesterday. There's definitely strong evidence that it was blatant violation given they kept sending and adding in interest and late fees over the course of 6 months even though they knew we filed.

Yeah..good question LOL I asked the same thing and I have no idea at this point. Lawyer said it could go either way, it would be up to the trustee. I guess if it goes into the plan then it just pays it down that much faster and we will be less than 60 months ?? Would love to be able to keep the $ though - could definitely use it for sure!

Will keep ya posted

[steveok]

You'll love this one. We are preparing to file by month end. We owe a small amount to state taxes and have been making monthly payments for about 6 months. We called today to stop the payment since it will be paid within the Chapter 13. They told us if we stop it they might pursue legal recourse against me. My attorney's paralegal got on a conference call with me talking to them and told them that they COULD NOT do that after I file...they said they still had the option to do it. Needless to say it was an interesting conversation...

[justbroke]

So given they violated it 4 times and all exhibits were provided proving that - does that mean its $1,000 per violation - and does that cover what is referred to "actual, statutory, punitive" or could it be more than that?

There's some good caselaw, which may not be binding on your court, which suggests that it's $1,000 per bill or correspondence, and $250 per phone call. Then there are punitive damages which are generally 2:1, so two times the violation. So, you "could" be awarded what I sought in my lawsuit (complaint) against one of my creditors. That was $4,000 for the 4 violations, and $8,000 in punitive damages. They settled with me before a judgment was entered, for about $3K.

Wow - wasnt sure our attorney would file it or not - but so glad he did! Per our agreement we split any $ awarded 50/50.

When it's obvious, it's easy money for the attorney! He'll at least get his fees plus some damages for you.

As to whether the money constitutes "disposable income", here is a VERY GOOD article from the ABI (American Bankruptcy Institute) on the topic.

http://www.alabar.org/sections/bankruptcy/newsletters/newslettermay1209.pdf

Therefore, postconfirmation causes of action that become property of the estate under Section 1306 remain property of the estate pursuant to Section 554(d), despite Section 1327, if they are not scheduled and made subject to administration or abandonment. In re Harvey, 356 B.R. 557 (Bkrtcy.S.D.Ga. 2006).

The Harvey ruling was based on 11 Circuit caselaw and aligned with a Florida bankruptcy court decision in In re Nott,
269 B.R. 250, 257 (Bankr.M.D.Fla.2000).

So unless there is some Exemption you can claim on the post-petition award of damages, it's likely property of the estate and subject to distribution. You can, however, petition the court that the distribution to the unsecured creditors... not include the unsecured creditor that violated the stay. Because that would just pay them for being bad.

[Pandora]

JB -

You're so nice.. Thank you for providing the information and sharing. I'd bake ya cookies if you were closer LOL

Nice to know how it could all enfold. At this point I know in the suit it does state something to the effect of the creditor not get any funds, even the claims that they filed are requested to be removed from our plan. Does it matter if its a secured creditor who violated vs. unsecured as to award? I'd be happy either way - if they agree to remove it, that'd be okay but to be able to keep any additional monies from violations would be nice as well.

[AngelinaCatHub]

JB -

You're so nice.. Thank you for providing the information and sharing. I'd bake ya cookies if you were closer LOL

Nice to know how it could all enfold. At this point I know in the suit it does state something to the effect of the creditor not get any funds, even the claims that they filed are requested to be removed from our plan. Does it matter if its a secured creditor who violated vs. unsecured as to award? I'd be happy either way - if they agree to remove it, that'd be okay but to be able to keep any additional monies from violations would be nice as well.

Christmas/Hanuka is right around the corner. Perhaps you could negotiate a couple bucks out of the Trustee. Your lawyer did a fine job. Be sure he petitions part or all of punitive to be discharge of that creditor who violated. Would you object to revealing that creditor just for info? If not, fine. 'Hub

[Pandora]

Christmas/Hanuka is right around the corner. Perhaps you could negotiate a couple bucks out of the Trustee. Your lawyer did a fine job. Be sure he petitions part or all of punitive to be discharge of that creditor who violated. Would you object to revealing that creditor just for info? If not, fine. 'Hub

'Hub - wouldnt that be a nice gift huh? Nope, no objections - was the county for taxes, and they sent to a law firm to further collect adding in tons of interest and late fees; can you say huge no-no?! We'll see how it plays out. I know I just recently read that gov't entities may not be held accountable for violations, but they still may have to wipe the debt. The law firm however...is another story I believe.

[AngelinaCatHub]

'Hub - wouldnt that be a nice gift huh? Nope, no objections - was the county for taxes, and they sent to a law firm to further collect adding in tons of interest and late fees; can you say huge no-no?! We'll see how it plays out. I know I just recently read that gov't entities may not be held accountable for violations, but they still may have to wipe the debt. The law firm however...is another story I believe.

Great. Every violation is a "count" and carries a statutory amount. Let them keep it up. Now depending on your state, here in FL you have to write a letter of intent to sue six months before you serve the suit. Then you can sue the municipality. Check your state statutes regarding this. I am surprised their paid law firm is not knowing the law. I am sure this has happened before even in your area. When you sue them, since it is a municipality, it would be in a Federal Court system and that is no real problem as it works about the same as any Court case. Depending how hungry your lawyer is, it could be possible he will work with you for contingency. 'Hub

[Pandora]

Thanks for the info 'Hub - I'm not sure what level we're at, but I think it says its going through BK court as that has final say and jurisdiction, I'll have to check again. Our attorney said there was no fee for filing suit and going through - if we win he'll take 50% of whatever the award is, plus the other side will pay for attorney's fees. At least, thats what it says in the contract we have as well as the suit itself (he's seeking compensation).

I'll just be glad when its all said and done. Yeah you'd think a law firm would know better right? Sheesh..would hate to have them represent me if they're blatant about violating!