Violations of the Automatic Stay and Injunction in Maine

Overview of the Automatic Stay & Injunction

When you file for bankruptcy, your creditors are automatically prohibited from further contact to collect on debts. This "stay" also has the authority to halt reposessions and other debt collections while you proceed with bankruptcy. There is a reasonable amount of time allowed for the courts to communicate this automatic stay to your creditors. However, if after this short period of time creditors persist in harassing you, they are violating the automatic stay.

If creditors continue to contact you after you have filed for bankruptcy, we will prosecute their improper behavior to the fullest extent. While violations of the automatic stay are designed to further intimidate you, you can actually receive monetary compensation from such creditors and even force them to pay your legal fees. If you have been a victim of such a violation, please schedule an appointment and we will fight for the compensation you deserve.

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Have You Been the Victim of Over-Aggressive Collection Efforts?

Many people who find themselves unable to make monthly payments on their accounts have been victimized by aggressive creditors or collection agencies. Debt collectors and creditors all too frequently harass consumers who miss payments by calling incessantly, calling and hanging up when the consumer answers her telephone, threatening to contact friends or family members, calling at work after being asked to call only the home number, or calling late at night or at other inconvenient times.

Most people assume that if they are responsible for the original account, they have no rights against creditors or debt collectors. However, there are laws designed to protect you from harassment!

If you have been subject to any of the following conduct by either an original creditor or a debt collection agency, we want to hear from you:

  1. Repeated or continuous calls more than 4 times in a single day
  2. Calls at unusual times or times known by the caller to be inconvenient (for example, before 8:00 am, after 9:00 pm, or on holidays)
  3. Calls in which the caller did not disclose his or her identity or hung up when you answered
  4. Callers or letter writers threatening to sue you or "pursue legal actions or remedies" when the debt is more than 6 years old
  5. Callers or letter writers falsely representing that you owe the debt when a friend or family member opened the account
  6. Calls placed to friends or family members where the caller mentioned that you owe a debt
  7. Callers requesting post-dated checks
  8. Creditors or debt collectors falsely reporting information to your credit reports
  9. Letters in which the writer mentions that it is a debt collector on the envelope

You are entitled to having any of the above conduct cease immediately. If the caller or writer's actions are repeated especially harmful, you may be entitled to monetary damages. If you think you may be a victim of the above conduct or other illegal collection efforts, please keep a record of all calls or notices received, including the date and time of calls, the caller's name, statements or threats made, and any expenses you have incurred due to the conduct.

You should also call our offices to make an appointment to discuss the collection efforts: (207) 283-3777. We actively pursue creditors who have violated the law.

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Common Violations

If you have filed for bankruptcy in Maine, it is illegal for a debt-collector to harass you. The following lists include common problems that debtors experience when dealing with aggressive debt collectors ("debt collector" excludes: the creditor, an affiliate, US officers, attorneys collecting o/b/o a client)

These actions are also violations of federal law, outside the context of bankruptcy. If you have been the victim of creditor harassment, regardless of bankruptcy protection, please contact Molleur Law Office: (207) 283-3777.


  • Has any collection agency (not the original creditor, but an assignee) made any threats of violence against you?
  • Obscene/profane language which you found abusive?
  • Called repeatedly or continuously?
  • Called without disclosing identity?
  • Made false representations as to association with the US or a state, falsely represented character, amount or status of the debt, that non-payment will result in arrest or imprisonment or garnishment/seizure of any property?
  • The false representation that the consumer committed any crime?
  • Threatening to communicate credit information known or should be known to be false?
  • Charging unauthorized (in original contract) fees, charges or expenses
  • Using envelopes indicating that sender is in the business of collecting debts
  • Threatening to bring legal action in its own name
  • Unauthorized entry into a dwelling to seize property
  • Repeatedly contracting non-debtor or stating that debtor owes a debt, to a non-debtor
  • Contacting debtor at unusual time or place which should be known to be inconvenient (time outside of 8am - 9pm)
  • Continued communications after notice of stop in writing


  • Mortgage states maximum monthly interest rate
  • A higher interest rate after default than before default
  • If mortgage is less than 5 year term, no balloon payments
  • Mortgage rates with an adjustable rate mortgage did not rise more than 2 percentage points a year, and a max of 6 percent over the entire loan period
  • Title 12 > Chapter 13 > Subchapter II > § 1715z-16 provides that rate rises cannot exceed 5% over life for single family home


  • Do you have knowledge or any reason to believe your mortgage balance, as reflected on your most recent bill, was incorrect or included unauthorized or illegitimate charges?

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Bankruptcy Law and Recent Cases

11 U.S.C. Section 362 of the Bankruptcy Code, otherwise known as the "Automatic Stay" is perhaps the most well known section in the Code. The Stay comes into play in every bankruptcy case at the moment the bankruptcy petition is filed with the Court Clerk's office. Section 362(a) delineates the types of matters which are "stayed", and subsection 362(b) describes the matters which are not bound by the Stay. Subsection 362(c) explains the time period during which the stay operates in cases under various chapters in the Code, and subsections 362(d) - (g) provides the framework for motions filed with the Bankruptcy Court for "Relief from the Stay" to enable a creditor to take action which is otherwise prohibited under subsection 362(a).

Penalties for Violations

Subsection 362(h) describes the penalties that can be assessed for violations of the Automatic Stay. It reads as follows:

(h) An individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages.

Note that subsection (h) only refers to individuals, Moratzka v. Visa U.S.A., 159 B.R. 247 (Bankr. D. Minn. 1993); corporations which find that they are victims of stay violations must resort to the general contempt powers of the Bankruptcy Court under 11 U.S.C. Section 105 to obtain relief. See In re Chateaugay Corp., 920 F. 2d 183 (2nd Cir. N.Y. 1990); Jove Eng'g v. I.R.S., 92 F. 3d 1539 (11th Cir. Ala. 1996). It is also important to recognize that subsection 362(h) is considered as an additional right for debtors and not foreclosing other remedies that might be available to debtors. 130 Cong. Record 6504 (House March 26, 1984).

This subsection has been interpreted to have a restriction built into the remedies available: the violation must be "willful" in order for damages and attorneys' fees to be awarded. An example of how "willful" has been defined some courts is contained in Atkins v. Martinez, 176 B.R. 1008 (Bankr. D. Minn. 1994): "The element of deliberation that is contemplated here, of course, is the specific intent to proceed with an act, knowing that it is proscribed by a court order". Recently, the First Circuit decided Fleet Mortgage Group, Inc. v. Kaneb, 1999 WL 1006329 (1st. Cir.) and described how "willful" will be defined in this circuit.

The Court concluded that a willful violation does not require a specific intent to violate the stay. The standard under Subsection 362(h) is met if there is knowledge of the stay and the defendant intended the actions which constituted the violation. Kaneb, supra. at 2. Further, where the creditor received actual notice of the automatic stay, courts must presume that the violation was deliberate. Kaneb, at 2. Finally, the First Circuit gave guidance as to the burden of proof in stay violation actions. "The debtor has the burden of providing the creditor with actual notice. Once the creditor receives actual notice, the burden shifts to the creditor to present violations of the automatic stay." Kaneb, at 2.

The Harm Caused by a Violation

Also of interest in the Kaneb case is that the debtor was awarded damages in the sum of $25,000 for emotional distress and $18,200.68 in attorneys' fees and costs of appeal. The emotional distress damages were deemed appropriate, in part, due to the specificity with which the debtor was able to describe the harm he suffered as a result of the bank's stay violations. Counsel should carefully read this decision to learn what to do (and not to do) in prosecuting and defending stay violation actions under subsection 362(h).

Litigating a Violation

There are two types of proceedings that can be brought: a "motion for order to show cause" which requests the Court to issue an order requiring the offending creditor to appear before the Court and explain its conduct (reminiscent of Ricky Ricardo telling Lucy that she "has some esplainin' to do"); or a formal adversary proceeding (summons and complaint). Either mechanism for bringing the mater to the Court's attention appears to be equally effective, unless the creditor is an individual or business with few contacts with Maine - in that scenario, the summons and complaint process is best to catch the attention of the offending creditor.

The Kaneb decision should be well cited for years since it may spawn a new pursuit of stay violators. While debtors may have been willing to let creditors off the hook with minor sanctions for a stay violation in the past, more significant sanctions could be sought in these matters in the future. The prospect of stay violations by credit card companies can only increase as the card companies and/or their accounts are bought and sold. Currently, credit card accounts in bankruptcy are considered commodities to be exchanged. It is expected that the selling companies will not always adequately label the accounts they package for sale, or that the buying companies have procedures in place to address bankruptcy concerns. Automatic Stay violators beware!

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Schedule an Appointment

If you feel that a Debt Relief Agency could help you overcome your debt crisis, please schedule an appointment to meet with us. Molleur Law has been filing Chapter 13 bankruptcies in Maine for over 30 years, creating new financial futures for consumers and businesses.

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