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NDNY: Attorney fee damages for violating automatic stay

In re: Burkart (NDNY Chap. 13 Bk 08-61077 (Hon. Diane Davis; decision Feb. 9, 2010):

Decision on motion for damages due to violation of the automatic stay. The creditor in question was Administratix of the estate of her mentally-handicapped brother. She obtained a pre-petition state court judgment against the debtor for fraud. The debtor filed a 100% repayment chapter 13 plan May 6, 2008. The creditor's attorney had previously (January 22, 2008) delivered a property execution on the county sheriff. Around the Fourth of July holiday, the debtor learned that two bank accounts had been executed upon by the creditor, and $159.99 seized. The funds were returned to the debtor a few days later. The court concluded that while the debtor may have suffered some anxiety during the short time the post-petition execution was in effect, it did not arise to such psychological or emotional harm to justify damages on those grounds. Nor were puntative damages justified, as the creditor's violation was due to an act of omission (failure to notify the City Court Marshall that the pre-petition execution was voided due to the bankruptcy case.)

However, the Court did determine that the debtor was entitled to attorney fees for the automatic stay violation. "As stated by the Court in Schultz, however, a creditor cannot sit back on its heels and do nothing once collection activities have been initiated against a debtor. Rather, a creditor has an affirmative duty under ยง 362 to take the necessary steps to discontinue its collection activities against a debtor. In re Schultz, 2009 Bankr. LEXIS 2645, at *14 (citing In re Parry, 328 B.R. 655, 659 (Bankr. E.D.N.Y. 2005))." Decision, at page 13. The amount of damages was to be determined after further review of the debtor attorney's timesheets.

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