Minneosta Automatic Stay Both a Shield and a SwordSome of the essential parts of chapter legislation is the “automated keep,” which is written into legislation at 11 U.S.C. § 362, and relevant to all chapter instances beneath Title 11. It’s thought of “automated” as a result of it instantly takes impact upon submitting of a chapter petition (except you’ve got filed a number of frequent instances).

Mainly, it “operates as a keep, relevant to all entities, of . . . the graduation or continuation . . . of a judicial . . . or different motion or continuing . . . to recuperate a declare towards the debtor that arose earlier than the graduation of the case beneath this title.”

The automated keep is what permits somebody going by a chapter the respiratory room they should reorganize and discharge their money owed. It stops all assortment actions (cellphone calls, demand letters, lawsuits, garnishments, and many others.) except they’re for the explanations acknowledged in 362(b). The frequent exceptions to the automated keep embody felony legislation or household legislation issues (one of the best curiosity of youngsters will nearly at all times trump chapter legislation).

As such, the automated keep is often considered a protect to chapter filers, defending them from collectors speeding to the courtroom home to sue them for cash damages. However, can the automated keep even be used as a sword?

Buried deep in 11 U.S.C. § 362 is clause (ok), which gives “a person injured by any willful violation of a keep offered by this part shall recuperate precise damages, together with prices and attorneys’ charges, and, in applicable circumstances, might recuperate punitive damages.”

When Can Collectors Be Sued in Chapter Courtroom?

This implies if a creditor willfully tries to gather cash from you after your case is filed, they are often sued in chapter courtroom; and whether it is decided they violated the automated keep, the creditor is on the hook to pay for the bankrupt debtor’s prices and authorized charges, in addition to punitive damages that are tacked on to precise damages to punish the creditor for his or her unlawful actions.

As soon as your chapter is filed, the payments and assortment actions by your collectors must cease instantly. An skilled chapter lawyer will know the way that can assist you implement your rights beneath the automated keep, and if vital, take the collectors to courtroom and make them pay.


With the automated keep, your reduction can begin instantly while you file a chapter case. If you want a free session about your choices, please give me a name at 1-800-551-3292, or go on to https://lifebacklaw.com/ for extra data. You can be comfortable you probably did.