Should You Sue The Creditor's Lawyer Who Had Notice Of The Bankruptcy And Participated In The Violation Of The Automatic Stay

Man o' man, I can tell you right now that I do not like it.  I do not want to do it.  I will do most anything to keep from doing it.  However, lately I have to admit that the arrogance of some of these lawyers, and the tactics which they elect to employ, make it very difficult to avoid.

I use to take the position that the creditor or collector violating the stay will deal with its own attorney should it feel it got bad advice or representation.  Besides, what I had learned was that if you sue the attorney this Sicilian thing kind of erupts where the attorney's client no longer matters and the attorney  feels that he or she must win the argument at all costs.  The case consumes too much time and too much money, and then much explanation has to be developed at trial as to why this happened to support the damages known as legal fees.  You typically see an attorney that might be a little bit of an ass anyway turn into some kind of kamikaze jerk.  You have to think, who needs that?

The problem is, however, that I am finding that these attorneys (and they are pretty limited in number) whether or not you include them the litigation as a party they become annihilative in any event, they refuse to remove themselves from the litigation in violation of the lawyer-witness rule, and they become venomous and wrackful.  So, maybe you should consider carefully who these attorney might be, and then do what you can to remove them from the litigation.  It might be fine to simply file a motion to disqualify them because they and their firm represent a witnesses in the case.  But, if you are dealing with these Rambo lawyers that would advise their clients and participate in the willful violation of the automatic stay or discharge injunction -- if you know them to be pernicious and malevolent individuals anyway -- to just include them in the litigation as a party.

My Dad use to say about physicians that bedside manners matter.  I can tell you now that the same is true for attorneys.  And, whether by accident or intent, if these attorneys lack ethical and moral temperament, they leave you little choice but to include them when the facts suggest they had notice and were involved in the violation.

All of this presupposes that the lawyer and law firm actually had notice of the bankruptcy, and with this notice took or allowed prohibitive action against your client.  This point does not need to be stretched or exaggerated.  You should not sue the lawyer unless you are spot on in this regard.

Then, of course, you need to consider what Jonathan Alper of Florida Bankruptcy Law Blog wrote a few years ago:

"Overheard an interesting case in bankruptcy court concerning a debtor’s petition to sanction a creditor for pursuing a state court case against the debtor after he filed bankruptcy. The debtor’s attorney explained to the judge that he had repeatedly told the creditor’s collection agent and their attorney about the debtor’s bankruptcy and suggested they drop their action against the debtor. Nevertheless, the creditor’s attorney pursued discovery from the debtor and went as far as filing in state court a motion to show cause why the debtor should not be held in contempt of court. The debtor had to appear in state court with his attorney to personally explain to the judge that his bankruptcy stayed further discovery or any other activity in the state proceeding. The debtor appeared in bankruptcy court in a wheelchair breathing through an oxygen mask and unable to speak directly to the judge. His attorney showed that the debtor’s disability made it unusually difficult for him to go to state court because the creditor would not abide by the bankruptcy stay.

The debtor’s attorney stated that the debtor sought sanctions against the creditor company but not against the creditor’s attorneys. The judge denied sanctions. The judge reasoned that while the creditor’s attorney clearly knew that collection and discovery was going on after the bankruptcy there was no evidence that officers of the company knew their attorney was violating the stay. Since the debtor’s attorney had dropped demand against the creditor attorney the judge had insufficient evidence of intentional wrongdoing on behalf of the creditor company even though, as the debtor argued, the creditor’s attorney was acting as an agent of the client.

In this case a debtor’s attorney extended some professional courtesy to a fellow attorney to relieve them of personal liability and by doing so lost a recovery for the debtor at this hearing. It seemed clear that the bankruptcy judge would have entered a sanction against the creditor’s attorney in favor of the debtor. Before an attorney lets a fellow attorney off the hook he should make sure the client consents after the client understands what may be the loss of a potential source of monetary recovery."

Comments

[Prince Ella Green]

After reading the article,I made a phone call to our attorney about Barrett Burke Wilson Castle Daffin&Frappier,I remembered sending Attorney Walter Thurmond,Barrett, Wilson,and Frappier all certified letters with a copy of our 'DISCHARGE ORDER'.These Boy's were not shy about ignoring it.(BBWCDF)have been added to our lawsuit along with Cenlar Federal Savings Bank,Aurora Loan Services,and Midland Mortgage.Having to fight with a 'DISCHARGE ORDER'in hand for 10yrs. is in violation of BANKRUPTCY LAWS.Such acts were committed knowingly,willfully,intentionally,they were also deceptive,false and emotionally draining.Each Mortgage Co. re-aged the debt after having bought it in spite of the 'DISCHARGE ORDER'.It did not stop there,it was reported as a live collectable debt by all 3 defendants.I wander if this LAWSUIT will back these BAD BOYS away?We will be wearing our new T-Shirts to court(FDCPA)''FOREVER DOGGING CREDITORS PERSISTANTLY ATTACKING''opp's I mean''FAIR DEBT COLLECTORS PRACTICES ACT''

[David Fuller]

It's pretty clear that the attorneys are part of the problem. The other part of the problem is that bankruptcy has become so expensive and complicated. The expense means that there are more pro se filers and the added complications mean that a lot of lawyers are overwhelmed just getting a petition into the court that won't get dismissed. This lets the creditors take a shotgun approach. If they violate the stay enough, then they can make up for the number of times they get dinged. If you hit their attorneys, their attorneys will stop facilitating stay violations.

[Bob Coffey]

You may want to make note of this debtor friendly case in regard to the issues above outlined. In re Pague, United States Bankruptcy Court, N.D. West Virginia.
April 5, 2010. MEMORANDUM OPINION.

In that same vein, does anyone have any debtor friendly case law (or any other kind, LOL) as to the agency relationship between creditor and collection agency, ie, that identifies the collection agency as the agent of the creditor in order to hold the creditor responsible for the acts of the collector???

Thanks,
Bob Coffey