It is well known throughout the legal community that when a debtor files for bankruptcy everything surrounding the bankruptcy comes to a halt. This includes any other cases or hearings that are brought in state court or otherwise. In a recent case an overzealous creditor learned the consequences of pursuing litigation against a debtor who has filed for bankruptcy.
The facts of the case are relatively simple: in October of 2012 a creditor had a judgment entered in state court against a specific debtor. In December the creditor submitted a request for summons to answer interrogatories to the debtor. The hearing for this was scheduled for February 6, however in the early morning hours of this day debtor filed for Chapter 7 relief. The hearing was continued until May 1 but was not removed from the docket. Out of fear the debtor appeared at this hearing. Again it was continued to September however this time the creditor requested that the matter be removed from the docket. By this time the debtor filed a motion seeking sanctions against the judgment creditor for willfully violating the automatic stay.
Ruling on the motion, the Bankruptcy Court found that the May 1 status hearing was a continuation of a prepetition judicial process in violation of the automatic stay. The court gave no leniency towards the creditor even though the hearing was continued absent their request. What all of this means is that continuing a debtors interrogatories hearing and not dismissing the summons for debtor’s interrogatories once it is known that the debtor has filed for bankruptcy, violates the automatic stay. It does not matter whether the debtor requested the continuance or not.
Leave a Reply