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If a lender violates the automatic stay, how do we go about asking for damages if they withdrew money from debtor checking acct?

San Diego, CA |

they gave a loan but we filed bankruptcy before the due date. We already went to the 341 hearing and just waiting to get the discharge in a week or two. They claimed they did not get the case number so they took the money yet they were informed and clearly included in the bankruptcy. The damage was just the money taken which was $560.

Attorney Answers 5

Posted

You very likely can pursue a monetary judgment against the creditor, but you should contact a local bankruptcy attorney to help you. You will probably recover far more, even after attorney's fees, than if you pursue it on your own.

Nothing contained in this message should be construed as legal advice. Brett Bodie, Attorney. http://sanfernandovalleybankruptcyattorney.com

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Posted

I would suggest contacting the attorney that represented you in the underlying case. He or she is likely to know what to do.

I typically call and ask for the creditor to return the money without delay. And if they do I consider the matter closed. However, on the rare occasion a creditor won't listen to reason, an ex parte application can be made to the court for an order to show cause why the creditor shouldn't be held in contempt for violation of the automatic stay.

If the court is persuaded by the application it will order the creditor to appear and explain why the money wasn't returned when the automatic stay violation was discovered. Should the creditor fail, the bankruptcy court has the power to award actual damages and attorney's fees for bringing the motion.

Good luck!

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Asker

Posted

I called and ask them to refund the money but they said there won't be any refund. It was for a payday loan and I had given them a post dated check. We have been doing that for a few months

David Watson Wiese

David Watson Wiese

Posted

Section 362(b)(11) The filing of a petition does not operate as a stay of the presentment of a negotiable instrument and the giving of notice of and protesting dishonor of such an instrument.

Posted

I agree with my colleagues' answers and would only add a word of caution for you. In your question you said "they gave a loan, but we filed bankruptcy before the due date." This may be my misunderstanding, but it appears that you took out a loan shortly before filing bankruptcy, received money, and then didn't pay anything back prior to filing bankruptcy. Although there can certainly be valid reasons for doing so, your creditor may believe that you defrauded them by taking out the loan and then immediately filing bankruptcy without making any payments. If they can prove that you borrowed the money and really didn't ever intend to repay it as you promised, that debt could stick with you after the bankruptcy is over.

Brian C. Fenn <b><a href="http://www.fennlawfirm.com">FENN LAW FIRM</a></b> 29222 Rancho Viejo Rd. Ste. 102 San Juan Capistrano, CA 92675 Tel/Fax: (800) 994-9079 brian@fennlawfirm.com

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Asker

Posted

Is that possible even if they did not file adversary action against us or attend the 341 hearing?

Brian Campbell Fenn

Brian Campbell Fenn

Posted

No. You're correct that if they want to prove fraud that they'd need to go file an adversary complaint. They have 60 days from the date set for the first 341 hearing in which to do so, and if that date passes, they'd need the court to grant an extension of that deadline. it sounds like you're probably in the clear if that 60 day deadline has passed. Best of luck to you in recovering your money!

Asker

Posted

I'm not passed 60 days yet but close to that. And it was for a payday loan which had been continuous for a few months then I filed for chapter 7. They refuse to refund as I contacted them requesting it

Brian Campbell Fenn

Brian Campbell Fenn

Posted

If they haven't filed the adversary yet, and based on the information you provided, it sounds unlikely that they will. The fact that it was an ongoing loan (and I assume you'd been borrowing/making payments/borrowing, etc.), does help your case and take away some of the possibility of successful fraud claim. Some of the other responses have given very good advice on how to recover the funds if the creditor will not do so voluntarily after you've informed them of the bankruptcy and the apparent violation of the automatic stay. One call from your current attorney would possibly do the trick. It's worked for me and my clients many times.

Posted

This happens, rarely, but it does. Demand they return the money immediately. Most creditors will comply without hesitation, the alternative is not a good move for them.

I am not YOUR lawyer. Don't rely on answers to questions as legal advice. For legal advice contact a Bankruptcy Attorney for a consultation. Tokarska Law Center is a Federal Debt Relief Agency representing individuals and businesses in filing for bankrutpcy protection under the U.S. Bankrutpcy Code. Kathryn U. Tokarska is a San Diego Bankruptcy Attorney, owner of Tokarska Law Center, 185 West F Street #100, San Diego, CA 92101, (619) 285-1992 www.sdbankrupt.com

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Asker

Posted

Thank you so i called them and they replied they will not refund the check. What do I do from here Going back to my original question

Posted

Start with asking for the money back, not starting/threatening a big battle.

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