Tips on Taking action on an Automatic Stay Violation

[NorthernCA]

Hi everyone,

We filed Chapter 13 in July 2006. The creditor for my minivan (which we surrendered in the plan) filed their claim with the trustee about a week and a half or so later, and about two months after that, we received a letter from a government office advising us that a LIEN had been placed on our home by this creditor. The date of the LIEN filing was about 3 weeks from when we filed our BK and they subsequently filed their claim against it.

Why I think they have violated us:

Clearly, they were notified of the BK filing, judging from the fact that they were one of the first to file a trustee claim.

Even more clearly is that the date of their lien filing was well after both our BK filing and their claim filing.

Why I think we need to be compensated:

BK is supposed to be a way to start anew - resolve all of your current debt and make better choices in the future so that your scores will raise and you will be eligible to live a normal, debt-free, credit-worthy life again. BK is the first step, and while it tends to lower your score for a moment, you will raise back up eventually as long as you keep current on everything you're paying from this day forward.

Well... guess what? We can go through all the crap it takes to even get a BK case started, start making our payments, plan to make all payments to everyone on time from this day forward, but if SOMEONE GOES AND PUTS A LIEN ON OUR PROPERTY, a FRESH lien, posted very recently, that tends to put a damper on the ol' credit score, doesn't it? It's not like it's an old debt on our report, it's a new posting, which makes it worse on our scores.

Obviously, it's a public record, so it's a known fact that it will definitely show up on our credit report at some point. In addition, the fact that it is a public record means that although we can demand them to remove it, it will stay a public record forever, and it will just show as "resolved".

That being said, the effect of this on our credit scores is definitely going to cost us money in the future. Car loans, home loans, refi's, etc.. Let's just say we would like to purchase a home in the future: Can you imagine the thousands in interest that we could end up paying someone for a $500K mortgage because of the impact that this violation makes to our credit score?

So, the problem lies in this. How do we prove what the monetary losses "could be"? I'm sure we would have to provide some sort of proof that we will lose "X" dollars if our credit score is lowered indefinitely because of this violation, right? But how do you prove something that you KNOW will happen, but hasn't yet happened?

Do you think we may have a case here? Who do we talk to?

As you may know from my other post here, my lawyer is hardly helpful and very unresponsive. When we requested that he take action on this, he did not respond at all. When I finally got to him in person, I asked him again, and he basically said that we would need to "stand in line", because this happens all the time and the judge typically will take the side of the creditor, chalking it up to an "honest mistake". Not only that, now he hasn't responded to my question - "have you at least taken the action to stop this lien order yet"? He hasn't told us that he did, and we sure haven't seen any correspondence forwarded to us.

This just isn't good enough for me! I can't sit here and roll over on this one... we've worked too hard to let it go down the drain because of some jerkoff creditor.

Lastly, since he doesn't respond, I need to find someone who will take this case. Do I need to go through my current lawyer? If anyone can give me some recommendations on who I can call/what website to visit to find a lawyer that handles this type of stuff, I'd appreciate it.

Thanks in advance!

[bige1030]

You would have to fire your current lawyer before you can get another lawyer to take your case. Lawyers consider it unethical to advise other lawyers' clients and won't do it, let alone take their cases. To "fire" your lawyer, tell them that you want them to withdraw from your case, and they are ethically obligated to do so.

I'm not exactly sure how to help you choose a good lawyer. Perhaps someone else can help you with that.

As for the lien: You should talk with the office that sent you the notice of lien filing and tell them that you are currently in bankruptcy. They might be able to help you get that lien off the record.

IMHO the creditor could not have made an "honest mistake" here because they filed a claim already. They know about your bankruptcy, and they thus know that they cannot sue you, let alone file a postpetition lien against your property. So if you ended up bringing an action for a willful violation of the automatic stay, you would be entitled to actual and punitive damages. Actual damages include costs and attorney's fees.

[NorthernCA]

You would have to fire your current lawyer before you can get another lawyer to take your case. Lawyers consider it unethical to advise other lawyers' clients and won't do it, let alone take their cases. To "fire" your lawyer, tell them that you want them to withdraw from your case, and they are ethically obligated to do so.

I'm not exactly sure how to help you choose a good lawyer. Perhaps someone else can help you with that.

As for the lien: You should talk with the office that sent you the notice of lien filing and tell them that you are currently in bankruptcy. They might be able to help you get that lien off the record.

IMHO the creditor could not have made an "honest mistake" here because they filed a claim already. They know about your bankruptcy, and they thus know that they cannot sue you, let alone file a postpetition lien against your property. So if you ended up bringing an action for a willful violation of the automatic stay, you would be entitled to actual and punitive damages. Actual damages include costs and attorney's fees.

Thank you!!!

I totally agree that this was a willfull action on their part.... perhaps a little revenge tactic.

So, I guess my question would be... could we also sue in regards to the future of our finances? I would think that jst from a "Black and White, This is what you see on paper" standpoint that we couldn't ask for that, simply because we can't prove how much money we could lose later in higher interest rates. But come on... it's painfully obvious that we would.

Does anyone know if this is indeed one of those "wait in line" sort of things or are these things actually handled pretty well?

[lrprn]

Does anyone know if this is indeed one of those "wait in line" sort of things or are these things actually handled pretty well?

Sorry to say that from what I've researched and read about these cases, your lawyer is correct. However, the bk courts are also very protective of the automatic stay and will go after creditors who deliberately violate it.

Your problem is going to be proving that your creditor willfully violated the stay. You can't go into court with what *might* have happened or will happen, even if the chances are 95% that it will. That isn't how the law works.

Here's a Google search that includes cases filed against creditors who were accused of violating the automatic stay - http://www.google.com/search?hl=en&q...ic+stay%22+sue . Read through the cases to see how they were handled and the outcome - keep in mind that these are from different states and your state may handle things differently. Keep us posted on what you decide to do, ok?

[NorthernCA]

Sorry to say that from what I've researched and read about these cases, your lawyer is correct. However, the bk courts are also very protective of the automatic stay and will go after creditors who deliberately violate it.

Your problem is going to be proving that your creditor willfully violated the stay. You can't go into court with what *might* have happened or will happen, even if the chances are 95% that it will. That isn't how the law works.

Here's a Google search that includes cases filed against creditors who were accused of violating the automatic stay - http://www.google.com/search?hl=en&q...ic+stay%22+sue . Read through the cases to see how they were handled and the outcome - keep in mind that these are from different states and your state may handle things differently. Keep us posted on what you decide to do, ok?

Thanks SO much. I will go check out the links now. And now that I think about it, the lien was filed well after they filed a claim with the trustee, I think it may have been over a month later (I need to go pull that document and re-read it). My lawyer, when I told him at the time, said that he could have allowed for error, had they dropped the ball somewhere in another department within a few days or weeks of us filing. However, because our filing and their response was over a month prior to this lien filing, they should have updated all departments by then to cease collection.

At any rate, this is a bankruptcy related issue, so I can't ask another lawyer to take on this portion of the case, can I? For some reason, I thought that this was separate, meaning the lawyer has to do separate work for this - I even thought that he would ask for an additional fee because this was separate action against a creditor.

Hey - one quick question: Let's say everything works out and we receive a settlement. Will the trustee count that as income and apply it toward our BK?

Thanks!

[lrprn]

Let's say everything works out and we receive a settlement. Will the trustee count that as income and apply it toward our BK?

It depends on when you receive the settlement.

Let's say you win in court and within six months of filing the creditor pays you what the courts said they owed you. In that case, since it's within six months of filing, the trustee can consider the settlement a part of your estate and take it for your creditors if he/she wants to. However, if you receive the settlement more than six months after you file, then the settlement is yours.

[HHM]

It depends on when you receive the settlement.

Let's say you win in court and within six months of filing the creditor pays you what the courts said they owed you. In that case, since it's within six months of filing, the trustee can consider the settlement a part of your estate and take it for your creditors if he/she wants to. However, if you receive the settlement more than six months after you file, then the settlement is yours.

Just to point out, the timing is not 6 months from when they actually receive settlement, but rather, is did the cause of action, i.e. the even that gave rise to the claim occur within 6 months of filing the case.

[NorthernCA]

OK - I think I get it. So if we filed in July, and they filed the lien in August/September, we may have to hand over the settlement money. Either way - I'm not too worried about it. I just want some action taken.

Thanks!