楊清泉律師專欄 - BK COURT AWARDS (PART 1)
楊清泉律師事務所
BK COURT AWARDS $10,000 PUNITIVE DAMAGES AND $2,500 FOR LOSSOF SLEEP FOR STAY VIOLATION
When debtor files for bankruptcy relief, the law creates an injunction that protects the debtor and his assets from collection efforts from creditors. Creditors must stop all collection efforts, including lawsuits, garnishments, levies, letters, and phone calls. All creditors of debtor receive a copy of the notice of case commencement which tells them that they have to stop all collection efforts. If creditor insists on continuing collection efforts, debtor can file a motion in bankruptcy court to have creditor declared in contempt of the court injunction against further collection efforts( violation of the automatic stay), and request for punitive damages against creditor if the violation is willful and malicious.
In Re Coopersmith, debtors owned and operated IPS Construction Inc., a company that provided general construction contracting services. IPS purchased some of its building supplies from M. G. Brown, a division of Foreman's Inc., on credit. The debtor husband personally guaranteed payment on the M.G. Brown account. After IPS defaulted on the account, M. G. Brown obtained a state court judgment for $4,951.16. The debtor husband attended the hearing and asked for an accounting of the amount owed. M.G. Brown did not provide that accounting, and the debtor appealed.
The matter was referred to arbitration. The debtor did not attend the arbitration hearing, so the arbitrator entered judgment in favor of M.G. Brown for $4,951.16 plus a $50 arbitration fee. When the debtors filed for Chapter 13 relief on June 1, 2011, they listed M.G. Brown as a creditor. On June 30, M.G. Brown, through Clay B. Foreman Sr., President of Foreman's Inc., mailed an account statement to IPS. Foreman handwrote on the invoice:"Added the $50 Arbitration fee to your total as stated by judge @ court hearing you have paid attorneys to delay paying your M.G. Brown bill! Your choice as I'm certain, attorneys appreciate it!"
The debtors contacted their lawyer, who sent a letter to M.G. Brown explaining that the debtors filed for bankruptcy so they were protected from attempts to collect prepetition claims. M.G. Brown denied receiving the letter (must have used the wrong zip code).
In August 2011, M.G. Brown sent a second invoice to IPS. This time it was for $5,053.37. Again, Foreman included a handwritten note. "Promised to make monthly payments!" but spent MONEY ON ATTORNEY, spent MONEY ON COURT SYSTEM Result = Expect you will pay attorney-up front to help you file bankruptcy! Clay Foreman". Then, in September 2011, M.G. Brown mailed a third invoice to IPS. This time it was for $5,105.35. Foreman added: "You have paid attorneys - UP FRONT instead of paying portion monthly! Your statement at small claims court of son, accepting your offer of paying a little MORE when you could rings hollow as I suspected! Judgment recorded PRIOR to your filing bankruptcy."
When debtor files for bankruptcy relief, the law creates an injunction that protects the debtor and his assets from collection efforts from creditors. Creditors must stop all collection efforts, including lawsuits, garnishments, levies, letters, and phone calls. All creditors of debtor receive a copy of the notice of case commencement which tells them that they have to stop all collection efforts. If creditor insists on continuing collection efforts, debtor can file a motion in bankruptcy court to have creditor declared in contempt of the court injunction against further collection efforts( violation of the automatic stay), and request for punitive damages against creditor if the violation is willful and malicious.
In Re Coopersmith, debtors owned and operated IPS Construction Inc., a company that provided general construction contracting services. IPS purchased some of its building supplies from M. G. Brown, a division of Foreman's Inc., on credit. The debtor husband personally guaranteed payment on the M.G. Brown account. After IPS defaulted on the account, M. G. Brown obtained a state court judgment for $4,951.16. The debtor husband attended the hearing and asked for an accounting of the amount owed. M.G. Brown did not provide that accounting, and the debtor appealed.
The matter was referred to arbitration. The debtor did not attend the arbitration hearing, so the arbitrator entered judgment in favor of M.G. Brown for $4,951.16 plus a $50 arbitration fee. When the debtors filed for Chapter 13 relief on June 1, 2011, they listed M.G. Brown as a creditor. On June 30, M.G. Brown, through Clay B. Foreman Sr., President of Foreman's Inc., mailed an account statement to IPS. Foreman handwrote on the invoice:"Added the $50 Arbitration fee to your total as stated by judge @ court hearing you have paid attorneys to delay paying your M.G. Brown bill! Your choice as I'm certain, attorneys appreciate it!"
The debtors contacted their lawyer, who sent a letter to M.G. Brown explaining that the debtors filed for bankruptcy so they were protected from attempts to collect prepetition claims. M.G. Brown denied receiving the letter (must have used the wrong zip code).
In August 2011, M.G. Brown sent a second invoice to IPS. This time it was for $5,053.37. Again, Foreman included a handwritten note. "Promised to make monthly payments!" but spent MONEY ON ATTORNEY, spent MONEY ON COURT SYSTEM Result = Expect you will pay attorney-up front to help you file bankruptcy! Clay Foreman". Then, in September 2011, M.G. Brown mailed a third invoice to IPS. This time it was for $5,105.35. Foreman added: "You have paid attorneys - UP FRONT instead of paying portion monthly! Your statement at small claims court of son, accepting your offer of paying a little MORE when you could rings hollow as I suspected! Judgment recorded PRIOR to your filing bankruptcy."
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