Let me save you a lot of money -- please, do not violate the automatic stay!

The automatic stay of the U.S. Bankruptcy Code has a lot of teeth in it, and you do not want to be bitten.  If you are a creditor in a bankruptcy case, your transaction with the debtor has already been costly for you.  You do not want to make it worse by thinking the automatic stay does not apply to you.

In California (9th Circuit) acts in violation of the automatic stay are VOID.  They are VOID even if you do not know the stay even exists. 

And also, if you do something in violation of the stay, you may be "sanctioned."  That is, you may have to pay the debtor money because you violated the stay.

An excuse such as "I didn't know about the stay" may keep you from writing a large check to the debtor for violating the stay, but it won't make the violation "ok."

What does that mean, exactly?  Well, if you got a judgment in state court after the debtor filed a bankruptcy, your judgment would not be any good.  If you conducted a foreclosure, the foreclosure sale would be void, so the buyer would not own the property. 

If you were the "buyer" at the foreclosure sale and then sold the property to a third party, you could have a double problem. You have now violated the stay, so the debtor can sue you; and your buyer did not receive good title to the property, so he can sue you.

I think you can see why it's a good idea to get some guidance once you receive notice of a bankruptcy filing.

Lastly -- and I am pretty certain you are not the type of creditor to do this --don't do what one car lot owner did.

In one of my cases a small used car lot had sold my client a car and my client was behind in payments.  When the car lot owner got the Automatic Stay notice, he decided he would go get the car.  He showed up with a shotgun and told my client, "I don't give a [expletive] about no [expletive] stay!  Give me the [expletive] car keys!"  He didn't get the keys, so he smashed the ignition switch with a dent puller and took off with the car.

As you might imagine, when I heard this I was jumping up and down with glee thinking about how much money the judge would make the car lot owner pay my client (along with returning the car). 

However, I did not get the windfall I was hoping for, as the car lot owner came to his senses when he got my letter.  He returned the car to my client (with a repaired ignition switch).