Important Bankruptcy Cases
Following are some of the important court decisions (cases) interpreting 11 USC 362, the United States Code Section providing for consumer bankruptcy relief.
The automatic stay (which takes effect the day your case is filed) is effective against all entities and brings almost all forms of civil legal action against the you to an abrupt halt, 11 USC 362(a)(1)-(8), Willford v. Armstrong World Industries, Inc., 715 F.2d 124, 126 (4th Cir. 1983). Hence, foreclosure, repossession, wage and bank garnishments etc. must stop upon filing of the petition.
Actions taken in violation of the stay are void as a matter of law, see In Re Schwartz, 954 F.2d 569, 26 C.B.C.2d 649 (9th Cir. 1992) (IRS violation of stay was void, not voidable).
Acceptance of payroll deductions after filing violates the automatic stay, Matter of Hellums, 772 F2d 379 (7th Cir. 1985). We can recover your garnished payroll funds even if you file bankruptcy the day before payday.
A drivers license revocation based on an unpaid accident judgment cannot be continued after discharge, Perez v. Campbell, 402 U.S. 637, 91 S. Ct. 1704 (1971).
Withholding of a students college transcript for non-payment of a discharged debt is prohibited, In re Merchant, 958 F.2d 738 (6th Cir. 1992).
Attorney fees and costs are mandatory for willful violation of the automatic stay and punitive damages are also available, United States v. Ketelson, 880 F.2d 990, 993 (8th Cir. 1989).