BUILDING A BETTER AUTOMATIC
STAY VIOLATION CLAIM
By David Leibowitz
Head of Litigation, UpRight Law
www.UpRightLaw.com
Y
ou often hear about the big
cases. We applaud them. Here’s
a little case which is every bit
as important to the debtor – a victim of
over-zealous collection activity.
Nee, a policeman, filed a chapter 7.
Sterling Ross, a collection agent for
Jared Galleria of Jewelry, continued
abusive collection tactics in violation of
the automatic stay including:
• Emails demanding payment and
threatening that “further action” will be
taken against the Debtor “if necessary.”
• A dunning and verbally abusive
telephone threatening an arrest
warrant.
• Three or four more calls where debtor
informed the debt collector that he was
in bankruptcy to no effect.
• Demands for payment even though
the collector from Sterling stated that
he knew who the Debtor’s attorney
was, and the judge assigned to the
case.
Neither Sterling nor Jared bothered
to respond to debtor’s motion for
sanctions.
The bankruptcy court held that Nee
was entitled to damages for violation
of the automatic stay, the Fair Debt
Collection Practices Act, actual
damages for emotional distress and
punitive damages. Nee v. Sterling Ross
& Assoc. LLC (In re Nee), 2015 Bankr.
LEXIS 1256 (Bankr. W.D. Pa. April 13,
2015) (Agresti, B.J.).
Practice Pointers
Willful post-petition collection activities
violate the automatic stay and may be
sanctioned pursuant to Section 362(k)
of the Bankruptcy Code, 11 USC § 362.
If these actions are taken by a debt
collector, they are also prohibited under
the Fair Debt Collection Practices Act,
15 U.S.C. § 1692 (2012). Threatening
the debtor with arrest is not permitted
under the FDCPA. 15 USC § 1692(e)
(4).
Remedies for violation of the automatic
stay are cumulative to those available
under the FDCPA. While courts vary
on this point, many courts hold that
damages for emotional distress may be
recovered for violation of the automatic
stay. Emotional distress damages
may be available for a violation of the
automatic stay. See In re Lansaw, 2015
WL 224093 *7 (Bankr. W.D. Pa. 2015)
(citing In re Wingard, 382 B.R. 892
(Bankr. W.D. Pa. 2008). Even without
specific evidence, the threat to a police
officer’s livelihood because he feared
arrest was enough to justify damages
for emotional distress.
National Association of Consumer Bankruptcy Attorneys
Summer 2015
The court allowed $1,000 in statutory
damages for violation of the FDCPA
as well as reasonable attorney’s fees.
The total damages granted were
$5,178 against Sterling Ross and
Jared Galleria, jointly and severally
consisting of:
• Attorney’s fee of $2,178
• Actual damages for violating the
automatic stay of $1,500
• Statutory damages under the FDCPA
for $1,000
• Punitive damages in the amount of
$500.
This is hardly the most egregious
case you might encounter. Yet it
demonstrates the value of protecting
your client’s rights against offensive
creditors. Protect your client’s rights. It
will pay for your clients and for you as
well.
CONSUMER BANKRUPTCY JOURNAL
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