Emotional Distress Damages Awarded After Violation of Automatic Stay in Bankruptcy Proceedings – Los Angeles Income Tax Planning & Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on September 23, 2014

Rupanjali Snowden took out a $575 payday loan from Check Into Cash (CIC) of Washington in order to make ends meet for her and her daughter. Before the payment was due, Snowden put a stop payment on the check and advised CIC that she was thinking about filing for bankruptcy. In response, CIC told her to call them every day until she filed for bankruptcy, otherwise they would call her “references.” Snowden complied, fearing embarrassment, and eventually filed.

Snowden, a hospital nurse, claimed to have suffered emotional distress after several harassing phone calls to her place of work from CIC. Even after giving them her bankruptcy attorney’s phone number and asking them to stop calling at work, CIC employees continued calling. CIC then said it would not cash the check securing the loan, but after filing her chapter 7 bankruptcy petition without directly advising CIC, Snowden discovered overdraft fees from her checking account where CIC had, in fact, cashed her check.

Instead of honoring the automatic stay and stopping the harassing phone calls, CIC used an electronic funds transfer to debit Snowden’s bank account, causing an overdraft by $816.88, including bank charges. All of which added up to Snowden’s emotional distress.

In April 2009, Snowden filed a motion for sanctions in the US bankruptcy court for the Western District of Washington, alleging that CIC had willfully violated the automatic stay provision of the bankruptcy code, 11 U.S.C §362. Snowden also sought a return of her funds and overdraft fees, emotional distress and punitive damages, and reimbursement for her attorney’s fees. CIC disputed it violated the automatic stay, and rejected a request from Snowden to settle the case for $25,000.

The bankruptcy court rejected CIC’s defenses, found willful violation of the automatic stay, and awarded emotional distress and punitive damages, the loan amount, the bank fees, and attorney fees to Snowden, totaling $27,483.55. After two rounds of appeals, the district court left in place the bankruptcy court’s original order minus some of the attorney’s fees.

To sum up: a debtor was awarded punitive damages for emotional distress when someone violated the automatic stay of all actions that goes into effect when the debtor files for bankruptcy protection. This is just another reminder of how powerful the bankruptcy court and the bankruptcy process is.

Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

{ 1 comment… read it below or add one }

Judson E Crump September 29, 2014 at 8:51 am

$27k for a stay violation. Excellent job, guys. Against a payday lender, too. Those scum get away with so much abuse it is great to see them have to pay up every once in a while.


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