Consumer Bankruptcy Journal Summer 2015 | Page 51

BUILDING A BETTER AUTOMATIC STAY VIOLATION CLAIM By David Leibowitz Head of Litigation, UpRight Law 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 51