How A Debtor Won $20,000 for a Creditor’s Automatic Stay Violation

When you file for bankruptcy, federal law orders your creditors to stop collecting. That order is the automatic stay, and a creditor that ignores it commits an automatic stay violation. A recent decision from the U.S. Bankruptcy Court for the Eastern District of Pennsylvania shows what that can cost a creditor in practice.

In In re Minarik, 675 B.R. 158 (Bankr. E.D. Pa. 2025), an electric utility kept threatening to shut off a family’s power for months after the debtor filed Chapter 7. Mike Assad represented the debtor and filed the motion for sanctions that brought the utility into court. The result: a $20,000 award for the emotional distress the threats caused.

The Automatic Stay Stops Collection the Moment You File

The automatic stay is a federal injunction built into the Bankruptcy Code at 11 U.S.C. § 362. It takes effect the instant a bankruptcy petition is filed, with no hearing and no formal service required. From that moment, creditors cannot contact you about a pre-bankruptcy debt, sue you over it, garnish wages for it, or threaten a utility shutoff because of it.

Congress gave the stay teeth in § 362(k)(1): an individual injured by a willful violation “shall recover actual damages” and, in appropriate circumstances, may recover punitive damages. The stay gives a debtor breathing room from collection pressure, and § 362(k) makes that breathing room enforceable.

What Happened in In re Minarik

The debtor filed Chapter 7 bankruptcy in January 2025. PPL Electric Utilities, his power company, was listed as a creditor and received electronic notice of the case. The notices kept coming anyway. A termination letter in late February set an April shutoff date, and another notice arrived in March. Even after Mike filed a motion for sanctions on the debtor’s behalf, PPL sent an email and a text warning that the power would be cut off on April 16. The automated calls continued as well, while every other creditor in the case had gone quiet.

The debtor is a disabled veteran. He and his wife support two children and a grandchild, and his daughter has chronic lung disease. The family depends on electricity to regulate the home’s temperature for her and, when needed, to run her oxygen. He testified that the shutoff threats left him lying awake at night and at times convinced he had to pay the bill despite the bankruptcy. The power was never turned off, but the fear that it would be was a daily presence in the house.

What Makes a Stay Violation “Willful”

Under Third Circuit precedent, a violation is willful when the creditor knew about the bankruptcy and intended the acts that violated the stay. The creditor does not need to want to break the law, and good faith is not a defense.

PPL blamed human error: its systems failed to flag the bankruptcy notice, and the company has since fixed its alerts and retrained employees. The court found a willful violation anyway. PPL knew about the case and intended its messages to reach the debtor, and that is the whole test. Cleaning up afterward may prevent the next violation, but it does not erase this one.

Is a creditor still calling or texting you after your bankruptcy filing? The Law Office of Mike Assad offers a free, confidential consultation to individuals and business owners in New Jersey and Pennsylvania. Call (609) 808-3300 or book online. Every meeting is over Zoom, and there is no obligation.

The Court Awarded $20,000 for Emotional Distress

The debtor did not present medical bills or lost wages. His damages were emotional: the stress and sleepless nights that came with fearing for a medically fragile child. That was enough. Under the Third Circuit’s decision in In re Lansaw, emotional harm counts as actual damages under § 362(k), and credible testimony can prove it without corroborating medical evidence.

At the evidentiary hearing, Mike presented the debtor’s testimony about the threats and their toll on the family. Judge Patricia M. Mayer found that testimony credible and awarded $20,000 in actual damages, in line with awards in comparable cases. Every case turns on its own facts, and no attorney can promise a particular number. What Minarik establishes is that real distress from post-filing collection threats can be compensated without a hospital record.

Why the Court Denied Punitive Damages (and Why the Ruling Still Matters)

Before deciding whether to award punitive damages, the court had to answer a harder question: can a bankruptcy court award them at all? Bankruptcy judges sit under Article I, not Article III, and the Supreme Court held in SEC v. Jarkesy (2024) that some monetary penalties require a jury trial in an Article III court. PPL argued that punitive damages fall in that category.

The court disagreed, adopting the position Mike briefed for the debtor. In a question of first impression, Judge Mayer held that enforcing the stay falls within the public rights exception to the Seventh Amendment: § 362(k) is a statutory cause of action Congress created and assigned to the bankruptcy courts, not a repackaged common-law tort. Punitive damages remain available in bankruptcy court after Jarkesy.

On these facts, though, the court declined to award them. Punitive damages are reserved for egregious and reprehensible conduct. PPL’s automated, impersonal messages were unlawful but not the targeted or abusive behavior that shocks the conscience, and no evidence showed an ongoing pattern across its customers. The tool remains on the table for the creditor whose conduct goes further.

A Note for Pennsylvania and New Jersey Debtors

Minarik is a published decision from the Eastern District of Pennsylvania, the bankruptcy court serving Philadelphia and the surrounding counties. New Jersey debtors get the same Third Circuit framework on willfulness and emotional-distress damages. Utility cases arise in both states because power companies run high-volume automated collection systems.

What to Do if a Creditor Contacts You After Filing

Keep everything. In Minarik, the saved termination notices and shutoff messages became the exhibits that proved the case.

Tell your attorney right away. Often one letter from counsel ends the contact. When it does not, a motion for sanctions under § 362(k) puts the question in front of the judge, and as Minarik shows, the court can order the creditor to compensate you for the harm.

Do not pay a pre-bankruptcy bill because the notices keep coming; that is the pressure the stay forbids. Talk to your attorney first. If you have not filed yet and creditor pressure is pushing you toward bankruptcy, you can share the details before your call so the consultation starts from the facts.

Talk to the Bankruptcy Attorney Who Argued In re Minarik

The Law Office of Mike Assad represents individuals and small business owners across New Jersey and Pennsylvania. Mike handled In re Minarik from the first sanctions motion through the briefing and the evidentiary hearing. He is admitted in both states and has represented debtors in the U.S. Bankruptcy Court for the District of New Jersey and the Eastern, Middle, and Western Districts of Pennsylvania.

Working with the firm looks like this:

• A free, confidential consultation, with flat fees where possible and payment plans available.
• Fully virtual representation by phone and Zoom, wherever you are in PA or NJ.
• The same attorney from the first call through filing and beyond.
• A live person when you call.

Call (609) 808-3300 or book your free consultation online. The firm has offices in Cherry Hill, New Jersey and Philadelphia, Pennsylvania.

Frequently Asked Questions

Can a creditor contact me after I file bankruptcy?

Not to collect a debt you owed before filing. The automatic stay under 11 U.S.C. § 362 bars collection activity from the moment the petition is filed, with a few narrow exceptions (criminal proceedings and certain domestic support matters, for example). If a creditor claims an exception applies, have your attorney verify it.

What damages can I recover for an automatic stay violation?

Section 362(k)(1) provides for actual damages, including costs and attorneys’ fees, and permits punitive damages in appropriate circumstances. Actual damages can include emotional distress. The amount depends on the evidence; in Minarik, the court awarded $20,000.

Do I need medical records to prove emotional distress from a stay violation?

No. In the Third Circuit, which covers Pennsylvania and New Jersey, credible testimony can be sufficient on its own. The Minarik court awarded damages without any corroborating medical evidence.

Can my utility company shut off my power because I filed bankruptcy?

Under 11 U.S.C. § 366, a utility may not cut off service solely because you filed bankruptcy or owe a pre-bankruptcy bill, though it may require a reasonable deposit (called adequate assurance) shortly after the case begins. In Minarik, the power stayed on, but the repeated shutoff threats still violated the stay.

Can bankruptcy courts still award punitive damages after SEC v. Jarkesy?

According to In re Minarik, yes. Enforcing the automatic stay falls within the public rights exception to the Seventh Amendment, so no jury trial is required.

Mike Assad

Founding attorney, admitted in Pennsylvania and New Jersey. Mike has guided individuals and businesses through bankruptcy across Pennsylvania and New Jersey.