FLORIDA BANKRUPTCY COURT REFUSES TO IMPOSE SANCTIONS AGAINST LENDER FOR ALLEGED STAY VIOLATIONS

Florida’s Middle District determined sanctions against a creditor were not warranted  for alleged violations of the automatic stay imposed by 11 U.S.C. § 362(k) of the bankruptcy  code. Section 362(k) requires creditors to cease collection activity once the creditor  becomes aware the debtor has filed for bankruptcy protection. In re: Xavier Nelson  Jamarado, Case No. 6:26-bk-00516-GER (MD Fla. March 24, 2026). 

In January 2026 debtor Xavier Jamardo (“Jamardo”) filed for protection under Chapter  7 of the bankruptcy code. Starting in 2021 Midland Credit Management, Inc. (“Midland”),  was actively garnishing Jamardo’s wages pursuant to a writ of garnishment. Midland  received notice of the bankruptcy filing on January 29, 2026, and dissolved the garnishment  on February 5, 2026. Jamardo’s employer released his wages by February 12, 2026. 

Despite this truncated timeline, Jamardo moved for sanctions against Midland  arguing he experienced significant stress because Midland failed to send notice of the  dissolution of the garnishment to him or his counsel. As a result, Jamardo incurred attorneys’  fees moving for sanctions. The bankruptcy court found the timeline for release of the  garnishment reasonable and explained that sanctions were only appropriate for willful  violations of the stay.  

The court concluded that although it was “regrettable” Jamardo was required to incur  attorneys’ fees, Midland acted promptly to dissolve the garnishment and Midland’s failure to  send the appropriate notice to Jamardo did not amount to a willful violation of the stay warranting sanctions.

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1. Florida’s Middle District determined sanctions against a creditor were not warranted for alleged violations of the automatic stay imposed by 11 U.S.C. § 362(k) of the bankruptcy code.

2. Midland received notice of Jamardo’s bankruptcy filing and dissolved a wage garnishment against Jamardo within seven days. Jamardo moved for sanctions because Midland failed to send notice of the dissolution to Jamardo or his counsel.

3. The bankruptcy court found the two-week timeline for return of Jamardo’s wages to be reasonable. The court concluded that although it was “regrettable” Jamardo was required to incur attorneys’ fees, Midland’s failure to send the appropriate notice to Jamardo did not amount to a willful violation of the stay warranting sanctions.

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