Can I Recover Attorney's Fees When a Creditor Violates the Automatic Stay in Texas?
Quick Answer:
Often, yes. When you file bankruptcy, the automatic stay stops collection and litigation against you. If a creditor keeps suing you anyway, an individual debtor can recover actual damages, including attorney's fees, for a willful violation under 11 U.S.C. § 362(k). A business debtor usually asks the court to hold the creditor in civil contempt under 11 U.S.C. § 105(a). Either way, you need to document your fees and raise the issue promptly.
What Counts as a Violation of the Automatic Stay?
Direct answer:
The moment a bankruptcy petition is filed, 11 U.S.C. § 362(a) bars creditors from starting or continuing lawsuits against the debtor, enforcing judgments, or taking other steps to collect a pre-bankruptcy debt. Filing a new claim or amending a complaint against the debtor after that point, without first getting permission from the bankruptcy court, is a violation.
A common example:
A business owner files bankruptcy while a state-court lawsuit is pending. A few weeks later, the plaintiff's lawyers file an amended complaint adding new claims. The debtor now has to pay a lawyer to respond to a lawsuit that legally should have stopped. Those legal bills are exactly what the stay-violation remedies are meant to cover.
What the stay does not cover:
- Other defendants. The stay generally protects only the person or company that filed. A creditor can usually keep suing a co-defendant, a guarantor, or a business partner who did not file. The main exception is the Chapter 13 co-debtor stay (11 U.S.C. § 1301), which protects people who co-signed consumer debts with a Chapter 13 debtor.
- Actions the court has allowed. If the creditor gets relief from the stay first, continuing the lawsuit is not a violation.
Which Law Lets You Recover Your Fees?
For individuals: 11 U.S.C. § 362(k).
An individual injured by a willful stay violation "shall recover actual damages, including costs and attorneys' fees." In the Fifth Circuit, which covers Texas, a violation is willful when the creditor knew about the bankruptcy and intentionally did the act that violated the stay. The creditor does not have to have meant to break the law. See In re Repine, 536 F.3d 512 (5th Cir. 2008).
For businesses: civil contempt under 11 U.S.C. § 105(a).
Section 362(k) is written for individuals, so a corporation or LLC usually asks the bankruptcy court to enforce the stay through its contempt power. The court can order the creditor to pay the fees the violation caused.
What "actual damages" usually means in practice:
The attorney's fees you paid to deal with the violation: reviewing the improper filing, writing to opposing counsel, responding in state court, and appearing at bankruptcy hearings. Courts look at what the violation actually cost you, so detailed time records matter.
How Do You Actually Recover the Fees?
1. Put the creditor on notice right away.
Send the creditor's lawyer written notice of the bankruptcy and ask them to withdraw the improper filing. Many violations happen because the other side didn't know about the bankruptcy, and a prompt notice letter is also your evidence that any later action was willful.
2. Don't ignore related motions.
Creditors who realize they have a problem often file a motion for relief from stay asking permission to proceed. If you oppose that motion, or file a limited response, say plainly that you are not giving up your claim for damages and fees from the earlier violation. That keeps the issue clearly in the record.
3. Total your fees and make a written demand.
Gather invoices or time records showing the work caused by the violation, and send opposing counsel a demand for that amount. Bankruptcy judges expect parties to try to resolve fee disputes before litigating them, and a clear, documented demand often settles the matter.
4. File a motion if the creditor won't pay.
An individual files a motion for damages under § 362(k). A business files a motion for contempt and sanctions under § 105(a). Attach the fee records and the correspondence showing the creditor knew about the bankruptcy.
5. Track the fees for the motion itself.
Fees you incur pursuing the damages claim may also be recoverable, depending on the court and the circumstances. Keep those records separate.
Frequently Asked Questions
Does this apply in Chapter 7, Chapter 11, and Chapter 13?
Yes. The automatic stay starts in every chapter the moment a petition is filed, and the same remedies apply.
The creditor withdrew the filing after I complained. Can I still recover fees?
Usually, yes, for the fees you already incurred. Undoing the violation stops further damage, but it does not erase the cost the creditor already caused.
What if the creditor didn't know I had filed?
An act taken before the creditor had notice is generally not willful. Once the creditor knows and keeps going, it is. That's why written notice is the first step.
Can the court award more than my legal fees?
For individuals, § 362(k) also allows other actual damages and, in appropriate cases, punitive damages. Contempt awards for businesses are typically limited to compensating the harm.
How do I prove my attorney's fees?
Detailed invoices or time entries that show the date, the work done, and how it related to the violation.
What to Do Next
You should immediately notify your bankruptcy attorney and provide all documents, as willful violations of the automatic stay under 11 U.S.C. § 362(k) can entitle you to actual damages, attorney’s fees, and possibly punitive damages. We’ve successfully recovered thousands of dollars for clients in similar cases—timely action maximizes your options.
If a creditor sued you, amended a lawsuit, or kept collecting after your bankruptcy was filed:
- Save everything: the filing, the date you were served, and proof the creditor knew about your case.
- Get written notice to the creditor's lawyer if that hasn't happened yet.
- Ask your bankruptcy attorney whether the conduct was a willful violation and which remedy fits: § 362(k) for individuals, contempt for businesses.
- Keep detailed records of every fee the violation costs you.
We've handled stay violations for individuals and business owners across Dallas, Collin, and Tarrant Counties. If a creditor isn't respecting your bankruptcy, call (469) 607-8552 for a free consultation.
