Once you file for bankruptcy in New York (or anywhere else for that matter), you are protected by the automatic stay. In a nutshell, that means no creditors (including the IRS!) can take, or collect or even attempt to collect anything from you without the Bankruptcy Court’s permission. (FYI, if the Bankruptcy Court gives such permission, that’s called “relief from automatic stay.”)
But creditors don’t always respect the law. Or in some cases they may not have been made aware of your bankruptcy filing in New York. Or they may just not understand the protections afforded by the automatic stay.
So if you’re worried that a creditor might come after your possessions, what can you do about it?
1. Keep track of everything going on. Write down notes and comments. And if a creditor does try to repossess your car or take anything else, send a letter to the creditor informing them that they are in violation of the automatic stay. If they don’t return it then, then they’re asking for trouble with the Bankruptcy Court. The key for you is to document everything and demonstrate very clearly that the creditor has received notice of your bankruptcy filing (or that you’ve made reasonable efforts to make sure that they’re aware of it).
2. File an “adversary action” in bankruptcy court. If the creditor does not respect the automatic stay and does not return your possession(s), the an adversary action is your next step. This is the equivalent of a separate lawsuit within your bankruptcy case. The same bankruptcy judge will review it and reach a decision. If you’re working with an experienced New York bankruptcy lawyer, then it’s just a matter of making sure your attorney knows all the facts of the situation and can accurately file the action on your behalf.
3. If necessary, file a “motion for turnover.” This is the step that enables the Bankruptcy Court to enforce your rights and get your possession(s) back. Again, if you’re working with an experienced New York bankruptcy attorney, then they will be able to advise you as to the best strategy to pursue to make sure you get your things back.
Key Point: A creditor can actually be punished for a violating an automatic stay and have to pay damages, including the debtor’s legal fees! It’s worth mentioning that I once helped a client fight an automatic stay violation against Caesar’s Palace which resulted in a large payment to me by Caesar’s Palace to cover the legal fees for their stay violation
Remember, this measure is there to protect not just you (the debtor) but also other creditors who have an interest in the case. So even if you’ve missed payments on a vehicle or anything else, it doesn’t change the fact that you are entitled to protection.
If you have any questions about stopping automatic stay violations, please feel free to contact Bankruptcy Automatic Stay, an experienced bankruptcy attorney in Brooklyn, for a free initial consultation.