Never Mess With the Automatic Stay, Says Bloomington Bankruptcy Lawyer

October 1, 2012 12:21 pm Published by

I read a lot.  The way I look at it, that’s part of my job as a debt consolidation lawyer offering Indiana bankruptcy help. The journal Consumer Bankruptcy News is especially helpful, because it keeps me informed of all the court cases that have to do with personal bankruptcy in Indiana and all across the country. Sharing the rulings in some of those cases with my Bankruptcy in Indiana readers helps me clarify the principles behind bankruptcy law and the way in which the law actually works in real-life situations. I’ve picked out six of those real-life cases to share with readers, explaining why the court ruled the way it did, and what that information might mean to anyone thinking about filing individual bankruptcy in Indiana.

To set the stage on the Jones case, in which Wells Fargo Home Mortgage, Inc. was ordered to pay more than $3 Million dollars in punitive damages, let me share the basic details of the debtor’s story:

  • The debtor, Jones, had filed a plan under Chapter 13 bankruptcy law.
     
  • The mortgage holder on Jones’ home was Wells Fargo.  Wells Fargo continued to charge Jones unreasonable fees and costs, totally disregarding the automatic stay, which requires all creditors, including mortgage companies to halt legal action.
     
  • When Jones filed bankruptcy, Wells Fargo did not adjust the account to show Jones’ loan as being current. Instead, the mortgage company actually charged fees out of the money that the bankruptcy court trustee sent to them monthly under Jones’  debt repayment plan.
     
  • Since Wells Fargo wasn’t following the system, it took awhile for this violation to be discovered.  The result was five years of litigation and hundreds of thousands of dollars in legal fees.

I need to remind readers that this case happened in a different state; the Zuckerberg bankruptcy law offices are concentrated only in central and southern Indiana. As I read the story, however, I couldn’t help thinking that matters never should have been allowed to get that far out of hand with the Jones matter.

As a Certified Consumer Bankruptcy Specialist, one of only 11 in the state, I often help negotiate mortgage modifications even if there is no bankruptcy filed.

The moment you file bankruptcy in Indiana, an order goes out from the bankruptcy court to all your creditors, telling them, in essence, to leave you alone! The whole concept behind bankruptcy law is to buy you breathing room to restart your financial life.  By slapping Wells Fargo with such a steep penalty, the court hoped to send a message to all creditors – the automatic stay means hands off!

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This post was written by Mark Zuckerberg

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