Court Awards Attorney’s Fees and Damages under §105 as Necessary to Carry Out and Give Meaning to §1301’s Co-Debtor Stay

Court Awards Attorney’s Fees and Damages under §105 as Necessary to Carry Out and Give Meaning to §1301’s Co-Debtor Stay

Debtor is married to Husband. Creditor is the electric utility for Debtor and her  Husband. Creditor has an approximately $2,500 claim against Debtor and Husband for residential electric services.

On August 30, 2016, Debtor filed bankruptcy, but not her Husband. When Creditor received notice of the bankruptcy, it stopped all collection efforts against Debtor. It did not stop collection efforts against Husband, however, because it did not know that there is a co-debtor stay under Chapter 13.  On March 29, Creditor started garnishing Husband’s wages.

On April 20, Debtor’s attorney called Creditor to notify it that it was violating the co-debtor stay and asked it to stop garnishment. On May 3, Debtor’s attorney sent Creditor a letter, again requesting that garnishment stop. Neither of these contacts stopped the garnishment. As of May 12, Creditor had garnished $883.01 from non-filing Husband.

Debtor filed this Motion for Contempt. Debtor asks the Court to order Creditor to stop the garnishment, return the funds, and set aside its judgment. In her motion, she asked for at least $9,500 in compensatory and punitive damages and $950 in attorney fees for the violation of the co-debtor stay. After the hearing and briefing, Debtor now asks for $1,400 in attorney fees. Debtor argues that the Court should award compensatory damages, punitive damages, and attorney fees, to remedy Creditor’s violations of the co-debtor stay.

Debtor notes that Husband’s income was to be used to make her mortgage payments and Chapter 13 plan payments. Because of the garnishment, Debtor was unable to make all of her mortgage payments and plan payments.

Creditor agrees that it violated the co-debtor stay and that it should stop garnishing Husband’s wages, return the wages, and set aside its judgment against Husband. Creditor disagrees, however, that Debtor is entitled to damages or attorney’s fees. Creditor argues that the co-debtor stay under § 1301 does not provide for damages or attorney’s fees and that damages and sanctions under the § 362 automatic stay provision do not apply.  Creditor argues that, because § 1301 does not provide for damages, courts are unable to award damages for § 1301 violations.

The Court entered an order on the agreed issues and ordered Creditor to stop the garnishment, return the wages, and set aside its judgment against Husband. The Court took the damages and attorney’s fees issues under advisement and the parties briefed the issues.

Log In to READ MORE

Please note, in order to view NACBA Member Content, you must sign in and then visit NEWS. If you are not a NACBA member, you may Become a NACBA Member 

No Comments

Post a Comment