Violation of the Stay?

[freedom7]

Hey all,
My credit union which was included in our CH 7 for a small personal loan, 4400.00 total locked us out of our accounts upon filing on 7/30 and now is billing us for the personal loan that will be discharged in a few weeks, what do I do here? I know they can't even bill me, but they are!

[keepmine]

Contact your attorney.

[nick09]

definantly contact your attorney and keep all letters they send you....

You could possibly get money from them for harrasment

[freedom7]

no attorney to call, went pro-se, which has been fine except for not knowing what to do here.

Do I need to file anything with the court, or should I wait and see if they send anything else out?

[DebtEnder]

You should file a Motion for Sanctions against the CU for Violation of the Automatic Stay.

I would send them a certified letter return receipt requested giving them 5 days to return any monies they have. Their right of setoff can only occur before you filed BK or if they got a relief if stay to do so.

Section 362 (a) (7) apply to "the setoff of any debt owing to the debtor that arose before the commencement of the case under this title against any claim against the debtor..."

Therefore, a creditor must obtain relief from stay before using any right to setoff after the filing of a Bankruptcy.

But let this be a lesson to others. If you owe a bank money, don't keep any assets with them.

[justbroke]

You should look around for the process. You would need to file a Motion for Entry of Order to Show Cause and for Sanctions. In order to get to Sanctions, you need to have the Court order the creditor (the credit union) to appear before the Court and show cause as to why they shouldn't be sanctioned.

The FIRST thing you need to do, is to send a 5 day demand letter to the Credit Union. This letter should be strongly worded. First it should indicate that "as they know" you have filed for protection under Title 11 of the Bankruptcy Code. That you are under the protection of the Automatic stay which protects your from collection activities. Then you'd state that they are in contempt and violating the automatic stay. You finally state that if they don't contact you in 5 days that they have ended all attempts to collect the discharged debt, that you will file, upon the 6th day, a Motion for Entry of Order to Show Cause and for Sanctions.

Send this certified mail return receipt requested. If you don't have something in your mailbox on day 5... you should create the Motion to Show Cause... and file it with the clerk and serve it on the CU on day 6. You may need to call the Clerk of the Court to ask for a date on the Court Calendar... but that's a procedural thing.

Do this so that this credit union will stop. Do this for all of us!

Please note, that they could still file a Motion for Relief from the Automatic Stay in a "timely" manner in order to exercise their right of setoff.

[NoMoreCards]

The FIRST thing you need to do, is to send a 5 day demand letter to the Credit Union. This letter should be strongly worded. First it should indicate that "as they know" you have filed for protection under Title 11 of the Bankruptcy Code. That you are under the protection of the Automatic stay which protects your from collection activities. Then you'd state that they are in contempt and violating the automatic stay. You finally state that if they don't contact you in 5 days that they have ended all attempts to collect the discharged debt, that you will file, upon the 6th day, a Motion for Entry of Order to Show Cause and for Sanctions.
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Can this be done before the debt is actually discharged, as in the case of the OP? I ask because I have a very similar situation as well.

[justbroke]

Can this be done before the debt is actually discharged, as in the case of the OP? I ask because I have a very similar situation as well.

Absolutely! If they send a bill, that's an attempt to "collect" a debt. That is strictly forbidden and is actually contempt of court. The Automatic Stay (11 USC 362) is very powerful and was put in place to stop all collection activity.

If you are having an issue with a setoff, you can still challenge their holding of your money by filing a motion to show cause for them basically being in contempt. Any entity that holds your money from you without asking the Court to exercise their right of setoff or some other cause, must return the money. Otherwise, they are in violation of the Automatic Stay. particularly, 11 USC 362 (a)(3) which states that it's a violation for "any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate; "

Putting a hold on your money and not giving it back to you has been proven in caselaw time and time again as "exercising control over property of the estate".

Sending you a bill, is one of the worse things they can do! At least with holding your money, they can actually file a motion for relief from the automatic stay (MFRS) in order to exercise a right of setoff. However, sending a bill... is a big no-no!

[NoMoreCards]

Sweet!! Thank You Justbroke!!

[DebtEnder]

Justbroke always says things so much better then the rest of us

[freedom7]

the bill is what bothered me most, they only have about 7 dollars held against a 4400.00 UNsecured debt. They will receive my letter tomorrow, mailing today, certified, R>R>R, and if they don't respond I will pursue this further.

Thanks JB.