The facts as in this case fortunately do not happen often but when they do, the Courts impose damages to achieve punishment and deterrence.
When a debtor files for bankruptcy, all garnishments of wages must be stopped immediately.
Facts of this case:
- Debtor owed $5,053 to ECMC (a sophisticated creditor) when she filed for a Chapter 13 Bankruptcy Case.
- For almost two years, the debtor’s wages were garnished 37 times.
- ECMC was aware of the following: notice of the Bankruptcy, filed a proof of claim and manually processed 15 refunds when they acknowledged that the automatic stay was violated.
- Garnishments still did not stop.
- Debtor hired a lawyer and filed an adversary proceeding.
- The debtor’s complaint alleged that the garnishments caused her extreme stress which resulted in vomiting episodes, excessive medical bills and an inability to work.
- Debtor’s financial situation left her with very little cushion and any garnishments would have thinned the cushion.
- The Court could not conclude that the garnishments were the particular stress that caused the vomiting episodes since there were many other causes of stress in the debtor’s life.
- The plaintiff did not meet her burden of proving by a preponderance of evidence that the garnishments of her wages caused: the loss of her job, need to borrow money from her Mother to pay medical bills, necessity to obtain COBRA benefits, missed work or denied a promotion at Starbucks.
- Even if the Court could conclude that the garnishment stress caused the plaintiff’s uncontrollable vomiting episodes, the Court was not provided sufficient evidence to measure the medical costs or lost wages that resulted
- The plaintiff did incur attorney’s fees of $8,395 and these were awarded as actual damages.
- Plaintiff awarded $74,000 to debtor for punitive damages ($2,000 for each violation for the garnishments).
Garnishments may make you sick but hard to prove the exact correlation. However, this Court’s found that this creditor’s conduct was reprehensible when they knowingly violated the Debtor’s rights.