Culik Law Wins Bankruptcy Trial On Violation of Automatic Stay
The case was based on a credit union’s violation of the bankruptcy “automatic stay,” which generally requires that creditors stop all collection activity against consumers immediately upon notification of a bankruptcy filing. In order to resume collection efforts, a creditor must obtain permission from the Court.
In this case, the consumers alleged that the mortgage servicer added thousands of dollars in improper fees to their outstanding balance, and that it improperly applied their subsequent mortgage payments. The Bankruptcy Court previously determined that these actions were unlawful and granted summary judgment in favor of the debtors. A trial was then held in order to calculate damages, and the Court ultimately awarded a total judgment in favor of the debtors for $62,225.55.
In doing so, the Court rejected the creditor’s “computer did it” defense, which suggested that that they shouldn’t be penalized because the violations were a result of their computer software program. Instead, this type of a defense “is a nonstarter . . . since intelligent beings still control the computer and could have altered the programming appropriately.” In re McCormack, 203 B.R. 521, 524 (Bankr. D. N.H. 1996).
A bankruptcy case is intended to provide you with a fresh start, and improper creditor actions can prevent you from realizing the benefits of a true fresh start. Violations of your bankruptcy rights are therefore a serious matter, and Culik Law makes it a priority to seek out and litigate on these issues for consumers.