Can I Seek Emotional Distress Damages in a Bankruptcy Case?
The question of whether a debtor can seek and obtain emotional distress damages in a consumer bankruptcy case might seem like an odd one given that most debtors are concerned primarily with getting debt under control and achieving a discharge. However, it is important to keep in mind that there are legal protections in place to protect debtors when creditors do not abide by federal bankruptcy law. Following other court, the Seventh Circuit Court of Appeals (which includes Illinois) has ruled that, in some cases, a debtor may be eligible to receive emotional distress damages when a creditor willfully violates the terms of the automatic stay in a personal bankruptcy case. Why Would Emotional Distress Damages Come Into Play in a Bankruptcy Case? Under Section 362 of the U.S. Bankruptcy Code , the automatic stay applies as soon as a debtor files for bankruptcy. The automatic stay prevents creditors from continuing with any attempts to collect on the debts owed by the debtor, from maki...