How To Determine Whether A Creditor’s Action Is A Violation of The Automatic Stay
August 30, 2007
The United States Court of Appeals for the Tenth Circuit recently decided Johnson v. Smith, No. 05-8089 and, in doing so, set out nicely the requirements for finding a violation of the automatic stay in bankruptcy.
The case arose when M&M Auto Outlet-Wyoming, Inc. repossessed the debtor’s pickup truck after a Chapter 13 bankruptcy petition had been filed.
The court held that in order to demonstrate a violation of an automatic stay of 11 U.S.C. 362(k)(1) the debtor bears the burden of establishing, by a preponderance of the evidence, that the creditor knew of the automatic stay and intended the actions that constituted the violation; no specific intent is required.
In other words, all that need be proven is that the creditor knew of the bankruptcy and acted in the face of it. The debtor need not prove that there was an intent to violate the automatic stay, merely that there was an intent to take the act. Period. End of story.
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