Sanctions for Willful Violation of the Automatic Stay

Posted by NCBRC - November 25, 2012

The Bankruptcy Court for the Northern District of Illinois took decisive action to sanction an internationally active telecommunications company, Owtel Inc., for persistent violations of the automatic stay under section 362(a)(6). In re Galutan, No. 12-31837 (Bankr. N.D. Ill. Nov. 16, 2012). The court found that Owtel was informed of the debtor’s bankruptcy filing on August 12, 2012, but continued to dun her for payments of the $74.00 debt with repeated letters and telephone calls to her home phone and cell phone as often as twice a day. Finding that the conduct was willful the court turned to the appropriate damage award under section 362(k). Although the Seventh Circuit does not permit monetary awards for emotional distress the court found actual damages in the amount of $2,940.00 for attorney fees and costs incurred in pursuing the stay violation. In addition, the court found that the egregious nature of Owtel’s relentless pursuit warranted a punitive damage award of $15,000.00. The court ended with the warning that if the violations continue, it would consider further sanctions in the amount of $500.00 per day.

Galutan Order

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