Consumer Law

An Example Of Illegal Collection During A Bankruptcy Case

By M. Stan Herring

StayViolation.Com has posted an article about a lawsuit between creditor and debtor. In Texas, Brad Collier bought almost $1,000 worth of mobile home parts and supplies from Hill's Mobile Home Parts & Service, owned by Paul Hill.

Collier soon after filed for Chapter 13 bankruptcy and failed to immediately notify Hill. However, after receiving notification, Hill hired Josh B. Maness as a representative "in regard to collection of the pre-petition claim." Maness sent a letter to Collier's bankruptcy attorney and demanded to be paid the full balance of Collier's debt.

Misstatements were made in the letter that Mr. Maness attributed to an unfamiliarity as to how to use the Bankruptcy Court's PACER/ECF system. Regardless, the Court found the letter constituted a willful violation of the automatic stay issued in Mr. Collier's Chapter 13 bankruptcy because no good faith defenses are allowed as to stay violation. The Court concluded this "ill-informed conclusion based upon an insufficient investigation" was "not a technical violation based upon an innocent mistake" as "[t]his is precisely the type of behavior that the automatic stay is intended to preclude".

Following the letter, Hill then posted a sign out at a major intersection of US Highway 80 in Scottsville, TX, near where Collier and his friends, family, etc live, that said: "BRAD COLLIER OWES ME $984.23 WILL YOU PLEASE COME PAY ME!"

Hill refused to remove the sign and it remained posted in public for 21 days.

Paul Hill only agreed to remove the sign at the hearing scheduled by the Bankruptcy Court on Brad Collier's requested expedited hearing for an injunction.

Mr. Hill contended throughout the litigation that the directive on the sign -- "WILL YOU PLEASE COME PAY ME!" - did not constitute an effort to collect a debt because there was no question mark at the end of the sentence. However, the Court found that the use of an exclamation mark in lieu of a question mark demonstrated that the opposite was true. "The exclamation mark transforms the sentence into a directive, which demands that the Debtor pay the debt." The Court further found that the Bankruptcy Code was clear. "Any effort, action, or demand by a creditor to collect a pre-petition debt violates the automatic stay".

Hill also argued that putting up the sign was his right given by the First Amendment. However, Hill's actions caused him to have to pay $21,820 in punitive damages.

If you have problems with debt collectors following bankruptcy, feel free to contact us.

Full post as published by Alabama Consumer Blog on April 21, 2009 (boomark / email).