One of the most powerful protections the Bankruptcy Code, if not the most powerful, is the automatic stay. Contained in Section 362 of the Bankruptcy Code, the automatic stay prohibits creditors from taking certain actions once your bankruptcy petition is filed. Section 362(a) states:
Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970, operates as a stay, applicable to all entities, of—
(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;(2) the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title;(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;(4) any act to create, perfect, or enforce any lien against property of the estate;(5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title;(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title;(7) the setoff of any debt owing to the debtor that arose before the commencement of the case under this title against any claim against the debtor; and(8) the commencement or continuation of a proceeding before the United States Tax Court concerning a tax liability of a debtor that is a corporation for a taxable period the bankruptcy court may determine or concerning the tax liability of a debtor who is an individual for a taxable period ending before the date of the order for relief under this title.
Sometimes, though, creditors ignore the court’s certificate of notice of filing and decide they’re going to keep trying to collect a debt. Fortunately, the Code also protects debtors who are being harassed by creditors like this.
Section 362(k)(1) of the Bankruptcy Code provides:
(1) Except as provided in paragraph (2), an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.
