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Obtaining emotional distress damages against a creditor

On Behalf of | Jul 16, 2018 | Bankruptcy

Virginia residents who file for bankruptcy will likely get an automatic stay from creditor activity. Some circuit courts have ruled that the stay is meant to protect the financial and mental health of a debtor. Therefore, if a creditor violates the stay, the debtor could be entitled to collect for emotional stress or anguish. As a general rule, an individual must present clear evidence that a willful stay violation caused such distress.

A willful violation means that a creditor knew about the bankruptcy and decided to contact a debtor of its own accord. Evidence that could be used to show that a violation caused emotional damage may include testimony from friends or colleagues. Depending on the conduct of a creditor, a judge may find that emotional distress is evident even without such testimony or other supporting evidence.

In addition to damages related to mental stress a creditor may have caused by a willful stay violation, the debtor may be entitled to other actual or punitive damages. Court costs and attorney fees could also be included in a financial award. If an individual does file for bankruptcy, creditors are only allowed to contact a debtor’s legal counsel to discuss issues related to a debt balance.

By taking legal action, it may be possible for a debtor to put a stop to creditor harassment. An attorney may be able to file a motion to hold a creditor responsible for willfully violating the automatic stay that was put in place after an individual files for bankruptcy. A notice from a debtor or another source might be enough to show that a mortgage company or auto lender knew about the debt. Witness testimony may help establish that the violation caused mental anguish.