Highlights from the Creditors Practice Annual Forum 2018: Stay Relief Violations

Last month, I taught a session at the Tennessee Bar Association’s Creditors Practice Annual Forum 2018.  My section was called “Litigating Stay Violations.”

The CLE was on September 26, 2018, so, sorry, you missed it. But, to get more mileage out of the materials I prepared, I’m going to post some of the info here.

First off, the automatic stay at 11 U.S.C. § 362 operates as a stay of most collection activity against the debtor in bankruptcy.

When the stay is violated, 11 U.S.C. § 362(k) comes into play, which provides in part that “an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.”

And, no, a violation doesn’t have to mean that the creditor had bad intent.

Actually, a willful violation of the automatic stay requires only that: (i) the creditor knew of the stay and (ii) acted intentionally in violation of the stay. TranSouth Financial Corp. v. Sharon (In re  Sharon), 234 B.R. 676, 687 (B.A.P. 6th Cir. 1999). “[P]roof of a specific intent to violate the stay” is not required, but instead only “an intentional violation by a party aware of the bankruptcy filing.” Id.

Basically, the debtor has to prove that the creditor had notice of the Bankruptcy and took intentional action that violated the stay. Long story short, it’s not a high bar to prove those factors.

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Tennesee Legislature Expands Hours for Foreclosures

It’s always a surprise when I take a quick glance at a statute and discover a discrete, subtle change.

For instance, today, I was scheduling a foreclosure sale.

For years, the statute on “when” you could conduct the sale (Tenn. Code Ann.  § 35-5-109) has said that a sale can be made on “any day Monday through Saturday” and “between the hours of ten o’clock a.m. (10:00 a.m.) and four o’clock p.m. (4:00 p.m.)” (excluding state or federal legal holidays).

Apparently, in 2017, the legislature changed Tenn. Code Ann. § 35-5-109 to expand the time of day you can do a sale. Now, you can conduct sales “between the hours of nine o’clock a.m. (9:00 a.m.) and seven o’clock p.m. (7:00 p.m.).”

Sometimes, the legislature works in mysterious ways. I have no idea why this was law was changed.

I understand the utility of allowing sales earlier in the day, but why allow them to be as late as 7pm at night? Who demanded this?

Oh well. I guess the good news is that I can coordinate my future foreclosures in Shelby County with the tip off for a Memphis Grizzlies game.