The Automatic Stay: The Federal Shield

The moment a bankruptcy case is filed, a federal injunction called the Automatic Stay (11 U.S.C. § 362) goes into effect. It is automatic. It is immediate. And it is powerful.

What It Stops

The stay stops almost all collection activity:

• Foreclosure sales
• Car repossessions
• Wage garnishments
• Collection calls and letters
• Lawsuits

Willful Violations

If a creditor knows you filed for bankruptcy and continues to collect, they are willfully violating the stay. Section 362(k) provides that an individual injured by a willful violation shall recover actual damages, including costs and attorney’s fees, and, in appropriate circumstances, may recover punitive damages.

Examples of Violations

1. The Repo Man: You file at 9:00 AM. The repo man takes your car at 10:00 AM. If the lender had notice, they must return the car immediately.
2. The Garnishment: Your HR department keeps garnishing your check after you file. The creditor has a duty to tell the Sheriff to stop.
3. The Harassing Call: A collector calls you and says “I don’t care about your bankruptcy.”

Making Them Pay

We file motions or adversary proceedings to enforce the stay. We don’t just get the activity stopped; we seek checks for our clients’ to compensate them for the stress and violation of their federal rights.