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Bank Hit with Sanctions for Violation of the Automatic Stay


February 23, 2016

A recent case from the Western District of North Carolina, Statesville Division, reminds us all of the consequences for violating the automatic stay. Nationstar Mortgage, LLC apparently continued its efforts to collect a debt from Chapter 13 Debtors after receiving actual notice on more than one occasion of the Chapter 13 filing. The offending conduct included sending representatives to the property to take photos, making telephone calls to the Debtors for a period of six months after the filing, mailing letters informing the Debtors of their default which could result in “foreclosure and the loss of your home,” and the service of a Notice of Foreclosure by the Sheriff. Each time the Debtors were contacted, they attempted to inform the representative and later the Sheriff of their Bankruptcy filing.

The Court noted that Nationstar had received notice of the Chapter 13 by (1) the mailing of the Plan, (2) receiving the notice of the §341 Meeting from the Bankruptcy Noticing Center, (3) verbally from the Debtors, (4) the mailing of a letter from counsel for the Debtor, and finally, (5) from the Trustee who made monthly payments to Nationstar on behalf of the Debtor.

The Court found these “egregious” acts to be willful violations of the stay and awarded actual damages of $300, punitive damages in the amount of $54,000.00 ($100 per call) and attorney’s fees in the amount of $3,297.93. All creditors should be aware of this decision and take steps to insure that systems are in place such that automatic notices are not mailed and calls made once a Bankruptcy case has been filed.