I have more actions against creditors for violation of the automatic stay going right now than I have brought in the entirety of my nearly 30 year career. What is it that makes creditors so heedless of a federal court injunction?

I have clients complaining of staid banks like Bank of America calling multiple times a day after they got notice of the bankruptcy; Chase trying to foreclose on a client’s house despite the automatic stay; the State of California levying against a Chapter 13 debtor for the second time in two years, well after the bankruptcy case was filed.

Is it desperation on the part of creditors? A general disdain for the law? Budgets that don’t permit training of staff?

I don’t know, but my mission is to make this scofflaw attitude costly for creditors. Debtors are entitled to a respite from collection efforts. It’s about time creditors got the message.

My colleague Nick Ortiz explained cash collateral as primarily a business bankruptcy concept: a creditor with a lien on income producing assets has a lien on the cash that asset produces as well. But you don’t have to have a traditional business to have cash collateral, and the duties it brings in a bankruptcy reorganization.

The issue usually comes up with respect to rental real estate: the monthly rent is cash collateral. In consumer cases, it is often the taxing authorities who have a blanket lien on all of the debtor’s assets. The other, obvious but oft forgotten lien holder is the mortgage lender, whose security documents undoubtedly give it a lien on the income produced by the mortgaged property.

In any bankruptcy case in which the debtor remains in possession of his assets under the protection and supervision of the bankruptcy court, the rights of the secured lender in the cash collateral must be respected. The debtor is prohibited from using cash collateral without either the consent of the secured creditor or a court order. Fail to get either consent or an order and appointment of a trustee, conversion or relief from stay are likely to follow.