Order Determining That Modern Rent to Own Violated the Automatic Stay and Awarding Damages Under 11 U.S.C. § 362(K). The Court ordered sanctions against a Creditor for violating the automatic stay, and granted nominal damages of $1 and punitive damages of $5,000 to Debtor. Pro se Debtor had filed a chapter 7 bankruptcy petition and listed certain lease-purchase agreements between herself and Creditor. The Bankruptcy Noticing Center served a notice on Creditor on September 5, 2025. Shortly thereafter, Debtor began receiving three to five phone calls per day, as well as text messages, from Creditor. These messages attempted to recover on Debtor’s prepetition debt, or repossess the personal property which secured it. Debtor missed opportunities to work as a result of her full voicemail. On October 31, Debtor explained to Creditor’s representative that she had filed bankruptcy, but the representative responded that he was instructed to continuously call anyone whose account was not current, regardless of a bankruptcy filing. As directed by the representative, Debtor emailed and called the Creditor to inform them of her bankruptcy proceeding. The manager of the store likewise indicated that he had received notice of the proceeding, but had been told the stay did not apply. The Court found that this behavior constituted a willful violation of the automatic stay, as Creditor had knowledge of the bankruptcy. Furthermore, the Court found this behavior justified damages under 11 U.S.C. § 362(k)(1). Debtor alleged injuries from the violation of the automatic stay, such as costs to file and serve the motion, missed work opportunities, and mental anguish; however, she failed to introduce evidence sufficient to quantify compensatory damages. As a result, the Court awarded $1 in nominal damages. The Court also awarded punitive damages because Creditor acted in reckless disregard of the stay, about which it had been notified multiple times. Further, Creditor’s constant phone calls and texts harassed Debtor. In determining the amount of punitive damages, the Court did not use the nominal damages as a guidepost because they were not representative of Debtor’s actual damages nor sufficient to deter Creditor and others. Instead, the Court determined a moderate damage award was necessary and reached $5,000 by doubling the amount that Debtor owed on the underlying contractual obligations.

Order on Motion for Determination that Automatic Stay Does Not Apply or, Alternatively, Relief from the Automatic Stay. The Court held that the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3613, overrides the bankruptcy code to the extent that a restitution debtor holds rights to property otherwise subject to the automatic stay. Debtor filed a voluntary chapter 13 bankruptcy case, listing among her assets real property subject to three liens.  One lien arose from a restitution judgment, subject to the MVRA, against Debtor’s ex-spouse, as a result of the ex-spouse having been found guilty of wire fraud. At the time the judgment was entered, Debtor and the ex-spouse owned the subject real property as tenants by the entireties. Upon entry of the judgment, the properly perfected lien attached to all of the ex-spouse’s property, including his undivided one-half ownership interest in the real property at issue. Subsequently, and prior to Debtor’s bankruptcy, the United States ( Creditor) initiated a civil action to enforce the lien against the ex-husband’s undivided one-half ownership interest in the real property in the middle district of North Carolina. Creditor sought a forced judicial sale and named Debtor as one of the defendants. Thereafter, Debtor filed for bankruptcy. Creditor requested a determination that the automatic stay does not apply to the Civil Action because the MVRA overrides the Bankruptcy Code. In the alternative, Creditor requested relief from the automatic stay. The Court determined that the automatic stay does not apply to the Civil Action. First, the Court noted that it had previously held that the MVRA allows for seizure of all property or rights to property notwithstanding any other federal law, also applies to and supersedes the Bankruptcy Code, including the automatic stay provided by 11 U.S.C. § 362(a). A restitution lien is valid against all co-owners, even if owned as tenants by the entireties, as here. While Debtor was not the defendant ordered to pay restitution, and although she had since become the sole owner of the property, the restitution lien nevertheless survived ex-spouse’s transfer of his interest in the property to her. The Court further noted that if such a transfer did permit a criminal defendant to evade the MVRA by simply transferring the affected property to a spouse after the property became subject to the restitution lien such a rule would also would eviscerate the statute’s effect. Therefore, the stay did not apply to the continuation, enforcement, and collection of the restitution against the real property in the civil action.