7th Circuit case on the Automatic stay.

In re: Radcliffe, No. 08-2885 (4/23/09).
Appeal, N.D. Ind., Hammond Div. Affirmed.

District Court did not err in granting debtor’s motion to enforce automatic stay provisions of bankruptcy code where creditor-pension fund announced to debtor that it would pay debtor his pension benefits, but would withhold said benefits and apply them to existing debt that arose when debtor failed to make required pension contributions to pension fund on behalf of his employees. Pension fund’s unilateral decision to apply pension benefits to existing debt violated automatic stay provisions of section 362 of bankruptcy code. Moreover, pension fund could not apply pension benefits to existing debt due to anti-alienation provisions of ERISA.

This is important to emphasize the power of the automatic stay. It goes beyond just stopping phone calls and collection action. Here, the pension board decided the debtor lost his pension privileges and tried to pay back debt instead of pay the debtor. The court ruled that this is a violation of the automatic stay. I agree. They do not have the right to pay creditors with the debtors funds which were exempt in the bankruptcy estate.

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Terrance Leeders

Chicago Bankruptcy Attorney, husband, father, Cubs fan.

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