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Automatic stays and creditor violations

Debtors in Texas who have filed for bankruptcy may have legal recourse if their creditors continue to pursue collections. Bankruptcy filers are given an automatic stay, during which creditors are prohibited from contacting the debtors to collect on the debts.

The type of penalty assessed against a creditor who violates the automatic stay is determined by the nature of the violation and whether the creditor willfully attempted to circumvent the bankruptcy law. For actions like foreclosures or repossessions, the bankruptcy court will generally order the creditor to return the seized property back to the debtor and provide compensation for damages that the debtor experienced due to the violation. The creditor may have to pay damages for costs related to having to rent a vehicle to get to work after the repossession of a vehicle or hotel costs if a home was seized in a foreclosure. The debtor's attorney fees may also have to be paid by the creditor if the attorney had to address the issue in court.

Debtors who believe that their creditors purposely violated the stay should inform their attorney as soon as possible. An attorney may be able to determine whether the violation was on purpose and should be pursued. Debtors should also make sure that the stay is in effect. The stay may not become immediately effective if the bankruptcy case is filed or may be lifted before the case has been discharged.

A bankruptcy attorney may advise individuals with substantial debts about which type of bankruptcy might help them find debt relief and assist them with determining which types of debts may be included in bankruptcy. If a creditor violates the automatic stay after bankruptcy has been filed, the attorney may take the necessary actions to hold the creditor accountable for the violation.

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