Creditors can't call, send collection notices, file lawsuits, foreclose, garnish wages, shut off utilities or repossess vehicles for the time period in which the automatic stay is in place
Some consumers who file for bankruptcy protection from creditors apparently aren't getting the breathing room the law provides.
Such was the case for one Chicago woman -- she'd prefer to remain unnamed -- who found herself without a car during the Independence Day weekend. Her "baby," as she calls her BMW, was repossessed, despite legal protection that should have prevented Jaysen Motors, where she bought the car, from doing so.
"I filed bankruptcy and followed the orders of the judge," the victim said.
She works two jobs, but said family emergencies pushed her into bankruptcy.
"I wasn't trying to beat nobody out of the money," she said. "My agreement was to make payments with him, but some stuff came up. My daughter lost her job."
She's not alone.
Bankruptcy filings are up nearly 37 percent from this time last year, with more than 1.4 million new filings expected by year's end.
Unfortunately, some consumers seeking protection may also get confusion.
Picker speaks that language and says one phrase -- "automatic stay" -- is key to many cases. He said the automatic stay is "basically like a force field."
"It's supposed to prevent creditors from getting at you," he said, and with it in place, creditors can't call, send collection notices, file lawsuits, foreclose, garnish wages, shut off utilities or repossess vehicles for the time period in which the automatic stay is in place.
But cases from across the country allege that many creditors are in violation of automatic stays by continuing to harrass consumers.
"Look, if you don't want to cooperate with me, I'm going to have to file a motion for sanctions and you're going to be defending yourself before the United States bankruptcy court at the Federal Building. And that's ultimately what happened," said the Chicago woman's attorney, Dave Siegel.
Siegel says Jaysen Motors was properly notified of the bankruptcy, but they repo'd her car anyway and then refused to ler her get belongings out of it.
"It was a complete violation of the automatic stay in the United States bankruptcy laws. It was egregious," Siegel says.
A judge agreed and said it was one of the most serious violations he'd seen as a bankruptcy judge.
A manager at the dealership disagreed, and said they weren't notified of the bankruptcy, but returned the car when ordered to do so.
And with her "baby" back in her driveway, the Chicago woman will get another boost from the bankruptcy law: a chance to go after the dealer for money she lost when it wrongfully took her car.
Sanctions against a creditor could include repaying the consumer for lost wages, lawyers' fees and rental car costs.
The two sides in this case are due back in court next month.