New Creditor Judgments After Starting Bankruptcy

 Posted on June 24, 2024 in Creditor Lawsuits

Filing for bankruptcy is often a challenging decision, but it can provide a fresh financial start. However, what happens when a creditor obtains a new judgment against you after you have initiated the bankruptcy process? This situation can be confusing and stressful, but understanding your rights with a Texas lawyer can help you through this difficult time.

Legal Actions You Can Take When a Creditor Obtains a Judgment Against You

When a creditor obtains a judgment against you following your filing for bankruptcy, you have several legal options at your disposal.

• Notify the Court: Immediately inform the bankruptcy court about the new judgment. This step is crucial as it allows the court to take appropriate action.

• File a Motion to Enforce the Automatic Stay: The automatic stay is a powerful tool in bankruptcy that halts most collection activities. Filing a motion to enforce this stay can stop the creditor from pursuing the judgment.

• Seek Sanctions: If the creditor knowingly violated the automatic stay, you may request the court to impose sanctions on them. This can include monetary penalties and covering your legal fees.

• Amend Your Bankruptcy Filing: If the debt was not initially included in your bankruptcy petition, you may need to amend your filing to ensure it is covered.

What to Know About the Automatic Stay in Texas Bankruptcy Law

The automatic stay is a fundamental protection offered by bankruptcy law. In Texas, an automatic stay goes into effect as soon as you file for bankruptcy. This stay prohibits creditors from:

• Initiating or continuing lawsuits against you
• Enforcing judgments
• Repossessing property
• Foreclosing on your home
• Garnishing your wages

However, it is important to note that the automatic stay does not affect certain debts, such as child support obligations or criminal fines.

Consequences for Creditors Who Violate the Automatic Stay

Creditors who violate the automatic stay can face serious consequences under Texas law:

• Contempt of Court: The bankruptcy court may hold the creditor in contempt, which can result in fines or other penalties.

• Damages: If you suffer financial losses due to the violation, you may be entitled to actual damages, including costs and attorney's fees.

• Punitive Damages: In instances of severe violations, the court may impose punitive damages to discourage future misconduct.

• Voided Actions: Any collection actions taken in violation of the stay may be declared void by the court.

Steps to Take if a Creditor Violates the Automatic Stay

If you believe a creditor has violated the automatic stay by obtaining a new judgment against you, take these steps:

• Document all communication with the creditor
• Gather evidence of the violation, including court documents and collection notices
• Consult with your bankruptcy attorney immediately
• File a motion with the bankruptcy court to address the violation
• Consider pursuing damages if you have suffered financial harm

The Importance of Timely Action and Professional Guidance

Dealing with a new judgment during bankruptcy proceedings can be time-sensitive. Prompt action is important to protect your rights and ensure the effectiveness of your bankruptcy filing.

Every bankruptcy case is unique, and the specific circumstances surrounding a new judgment can significantly impact your options and outcomes. Determining the best course of action depends on factors such as the type of bankruptcy filed (Chapter 7 or Chapter 13), the debt's nature, and the judgment's timing.

Contact a Boerne, TX Bankruptcy Attorney

Given the complexities involved, seeking the guidance of a San Antonio, TX bankruptcy lawyer is not just advisable—it is essential. An attorney can help you understand your rights, explore all available options, and develop a strategy tailored to your specific situation. Call Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.