Bank of America has been slapped with $45 million in punitive damages for their mishandling of a mortgage in California. The bank was cited specifically for the harassment experienced by the plaintiffs in the case and the emotional distress caused by those actions. The lawsuit arose because of Bank of America’s failure to comply with the automatic stay provisions of the U.S. bankruptcy code. For individuals or families facing unlawful actions by creditors, retaining the services of a New York bankruptcy lawyer can provide added protection against this type of harassment.

In early 2009, Erik and Renee Sundquist were struggling to keep up with payments on their Lincoln, California, home. As a result, they reached out to their mortgage holder, Bank of America, seeking a modification for their loan. Representatives of the bank informed the Sundquists that, because they were still current on their mortgage loan, they would not be eligible for consideration for loan modification. Despite maintaining a credit score of over 800, the Sundquists opted to default on their loan in March 2009 in an attempt to qualify for loan modification from Bank of America. Representatives of the bank, however, repeatedly lost the paperwork associated with the Sundquists’ requests for modification or denied their requests outright. In total, the Sundquists completed about 20 loan modification requests that were denied or lost by Bank of America. The couple was repeatedly given the run-around by Bank of America officials with requests for information the Sundquists had already supplied or updated information. On June 14, 2010, the Sundquists filed for Chapter 13 bankruptcy because of the actions taken by Bank of America regarding their home loan. The bankruptcy caused serious issues for the family and created financial and emotional distress.

U.S. bankruptcy law provides for an automatic stay of action by all creditors after bankruptcy proceedings have been filed. Specifically, creditors are prohibited from enforcing liens, attempting to acquire collateral or other property from the debtor or filing cases in court to recover amounts owed. In the case of the Sundquists, however, Bank of America ignored the automatic stay regulations more than six times in just two months by filing eviction proceedings, serving the couple with a three-day Notice to Quit and foreclosing on the property just one day after the Chapter 13 filing was made. The bank later reversed its decision and the sale but failed to inform the Sundquists of that fact. During the intervening months before the Sundquists moved back into their home, their home had been burglarized and most of the appliances and items of value on the property had been stolen. To add insult to injury, the homeowners association for their neighborhood assessed them a $20,000 fine for failure to maintain landscaping on their property. Bank of America also attempted to collect back mortgage payments from the couple during the period when the Sundquists were not living in the house and were not aware that their mortgage had been reinstated.

Renee Sundquist recorded the actions of Bank of America in a detailed journal that she kept throughout these proceedings. The repeated denials and loss of paperwork created emotional distress for the couple, who had only defaulted on the loan in an effort to obtain a loan modification from Bank of America. On numerous occasions, bank agents showed up unannounced at the home and banged on the doors, frightening the couple’s children and creating added stress for the family. As a result of harassment by the banking institution, the lawsuit indicated that Erik Sundquist attempted suicide and that Renee Sundquist was diagnosed with post-traumatic stress disorder. Renee Sundquist also experienced heart attack symptoms and was hospitalized as a direct result of the stress caused by the actions of Bank of America during this period of time.

For residents of New York City and New York State who are considering their financial options, consulting with a NYC bankruptcy attorney can prevent creditors from acting outside the law with impunity. Your New York bankruptcy lawyer can enforce the automatic stay provisions of the legal code to stop harassment in its tracks and to protect you and your family from situations like the one the Sundquists faced. By making sure you have a qualified NYC bankruptcy attorney on your side, you can resolve your financial situation quickly and effectively to ensure the brightest possible future for yourself and your family.