Automatic Stay Violations and Sanctions

Alternative title: Stupid Creditors

Today I started work on yet another motion for sanctions for violations of the automatic stay. For those unfamiliar with the intimacies of bankruptcy law, the primary protection that bankruptcy provides is the Automatic Stay, 11 U.S.C. 362. Under Section 362, once a debtor files for bankruptcy, creditors are prohibited from taking basically any collection action against them. That code section triggers automatically - and it is powerful. It will stop foreclosures, repossession, creditor calls, lawsuits, garnishments . . . basically every sort of collection activity.

Violation of the stay is pretty egregious. One case involved a car dealer who repossessed a vehicle despite having sufficient notice of the bankruptcy. Others involve creditors continuing to place collection calls and so forth.

As an attorney, I understand that things can slip through the cracks. The first step is almost always a letter, fax, or phone call to let the creditor know that is going on. In most cases, they are quick to acknowledge the issue and cease their actions.

My favorites are the ones that don't. Sanction awards for continuing violation of the stay can be pretty harsh. Awards of attorney's fees and even punitive damages are common. I am definitely looking forward to the results of these motions. Most of the time debtors are on the losing side - so payback can be a b!tch.

The Transient Nature of Bankruptcy

My last post was a bit of a client-rant; I should clarify a little. Not all clients are unpleasant. Some are very understanding, very helpful, and generally on top of things. Consumer bankruptcy requires very little on the part of the debtors - some pay stubs, some tax returns, a couple of credit counseling classes, and occasionally a market analysis or appraisal.

Some clients come prepared - printouts, spreadsheets, credit reports, paystubs, taxes, and tons of other information. These are my favorite clients. Their efforts make my life easier and makes their bankruptcy run all the smoother.

Others have no idea what their financial situation is, and more often than not they blame us for that lack of knowledge.

Some clients understand that I have 10 files on my desk, all of which need attention, and that they are #11. Others expect to be dealt with immediately, even for small things of little or no consequence.

Today, I sent out the discharge papers for one of my favorite clients, one of the early good ones. It makes me a little sad, in a way: no more patient explanations of the mysteries of the bankruptcy code, no more thoughtful questions, and nothing further with a good guy who ran into some terrible financial difficulties.

Bankruptcy is ultimately a transient operation; almost no repeat business, and a constant need for new clients. Each month we open 60 to 100 new files, and close almost as many. Sixty new people, starting their short transition though my sphere of responsibility, and 60 more passing on into the wild green yonder of post-bankruptcy life.

Psycho Clients

For some clients, no matter how well you treat them, or how honest you are with them, they still do nothing but complain and moan and whine throughout the entire process. I have had days when I have been both complemented on the ease of access to attorneys - it is relatively easy to speak directly to an attorney at our firm - and lambasted for not working quick enough.

The bottom line is that there are simply a lot of very, very stupid people out there, who expect an attorney to magically wave his wand and fix it all. The reality though is that it takes time and money - this is a business for us, after all.

So here, in my quasi-anonymity, I will rant regarding the general state of my client base. At the end of the day, no matter how you slice it, almost everyone who comes to see me is a debtor who can't manage money, who can't manage credit, and who really can't manage their own impulsive habits. As much as I love working with people directly (and I truly do), there are days when some or all of my clients go die in a fire and I would calmly mark the file "closed."

So, to all those potential clients out there - remember, attorneys are people, we do this for a living, and we deserve some f*cking respect.

Not Forgotten . . .

My life has been very busy lately - I have recently moved, and work has been picking up, so I have not had a lot of time to post, despite a lot of great topics coming to mind. I am going to make an effort to start posting more, with a focus on bankruptcy topics, hopefully towards making this blog a half-way decent place to post my thoughts and insights into consumer bankruptcy.

Stay tuned for more information.