Don't Do That (Part 2)
Part 1 of this three-part series focused on mistakes a debtor in bankruptcy could make with respect to property transfers. Today we focus on one of the most common, and serious, creditor mistakes: Violation of the “automatic stay.” An injunction is an order issued by a Judge that directs someone to do or (more often) stop doing something immediately. The two things most people know about injunctions are: (1) they aren’t easy to get, and (2) they should be taken seriously. It’s the – just for fun let’s call it the “injunction function” – that allows the bankruptcy system to work. A main goal of the bankruptcy system is to allow an orderly procedure, and an orderly procedure isn’t possible if creditors engage in a “free for all” as they compete to dismantle a debtor’s assets. Whenever a bankruptcy case is filed, the Bankruptcy Code provides for a stay of most types of creditor collection activity. And this stay happens automatically, making it a special sort of injunctio