What are my options if I'm being sued by an out-of-state debtor for violation of automatic stay? 3 Answers as of July 14, 2011

I'm a single-member LLC in CA. An out-of-state debtor recently gave notice of bankruptcy. His debt had been placed with a collection agency, which ceased collection activity immediately. However, I failed to act in a timely manner to stop periodic automated e-mail reminders of the debtor's account status. The reminders made no demand for payment, so I felt they didn't qualify as collection activity prohibited by automatic stay. I received a summons this week from the debtor's home state of MD, but there was a mandatory arbitration and jurisdiction clause in our contract. What are my options?

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Dan Shay Law
Dan Shay Law | Daniel Shay
It sounds like you have to deal with it in MD court regardless. You can hire a local attorney or ask the court for permission to appear telephonically. Make sure to cease all collection activities. Explain to The Court what happened and hope for leniency. You are not Chase, or BoA, so you should get off easy this time.
Answer Applies to: California
Replied: 7/14/2011
Bankruptcy Law office of Bill Rubendall
Bankruptcy Law office of Bill Rubendall | William M. Rubendall
An automatic deduction by a debtor is considered a voluntary payment rather than a collection effort. If the debtor asks to stop the payment failure to do so would be a violation of the automatic stay.
Answer Applies to: California
Replied: 7/11/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
See a lawyer now. In some jurisdictions you can be sued under the "Fair Debt Collection Practices Act." Sounds like this is what happened. The consequences are serious, you have to assert the arbitration clause as an affirmative defense. If you don't, you can lose it.
Answer Applies to: California
Replied: 7/6/2011
Click to View More Answers: