California Court Discusses Proving a Creditor Violated an Automatic Stay in a Bankruptcy Case

One of the many benefits of filing for bankruptcy is that a stay is automatically entered upon filing, preventing any creditors from taking legal action against the debtor. If an automatic stay is violated, a debtor can seek relief from the court. Issues can arise, however, when it is unclear when a bankruptcy action was filed. In such instances, the court may be unable to determine if a stay was violated and whether the debtor is entitled to the relief sought, as demonstrated in a recent California ruling issued in a bankruptcy action. If you are overwhelmed with debts, it is wise to talk to a California bankruptcy lawyer want to determine if bankruptcy is a suitable option for you.

Procedural and Factual History of the Case

It is alleged that the parties agreed that the debtor filed a chapter 13 bankruptcy petition in October 2017. The time the petition was filed is disputed, however, as it contains two timestamps that are 32 seconds apart, with the later time stamp indicating the petition was filed at 2:00 pm. At the same time that day, the creditor conducted a foreclosure sale of the debtor’s property. The debtor did not learn of the foreclosure sale until after it occurred.

It is reported that the debtor’s bankruptcy petition was dismissed for the failure to pay filing fees. He reinstituted the bankruptcy action, however, and filed a motion for summary judgment, asking the court to find that the creditor violated the automatic stay and to determine that the foreclosure sale and all actions related to it were void.

Proving a Creditor Violated an Automatic Stay in a Bankruptcy Case

The court denied the debtor’s motion for summary judgment, finding that factual disputes existed that prevented it from entering judgment in his favor. Specifically, the court noted that under the applicable rules of civil procedure, summary judgment should only be awarded in cases in which the moving party demonstrates the absence of any material fact.

In evaluating a motion for summary judgment, if there is a factual dispute, the courts should view the fact in a light most favorable to the non-moving party. The mere presence of a purported factual disagreement between the parties will not preclude summary judgment if a motion is otherwise properly supported, however. Rather, only a true issue of material fact will prevent the court from entering judgment in the moving party’s favor.

In the subject case, the court found that there were numerous issues of genuine fact, such as when the petition was filed and whether the creditor had knowledge of the bankruptcy action before it foreclosed on the debtor’s property, the precluded summary judgment. Thus, it denied the debtor’s motion.

Meet with a Skilled California Bankruptcy Attorney

People who file for bankruptcy are protected from adverse actions from creditors, and creditors can face penalties for violating their right to an automatic stay. If you have debts you are unable to pay, you may be eligible to file for bankruptcy, and you should meet with an attorney to discuss your options as soon as possible. Matthew D. Roy is a skilled California bankruptcy lawyer who can advise you of your rights and assist you in seeking any relief available. You can contact Mr. Roy through the form online or by calling (916) 361-6028 to set up a meeting.