Computer Glitch No Defense to Bankruptcy Stay Violation

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By Diane Davis

A bank that sent out seven account statements on a debtors’ revolving credit account violated the automatic bankruptcy stay, the U.S. Bankruptcy Court for the District of Puerto Rico held May 24 ( Vazquez v. Oriental Bank (In re Vazquez) , 2017 BL 174172, Bankr. D.P.R., No. 15-00131, 5/24/17 ).

The automatic stay prohibits communication by a creditor to a debtor to collect on a debt incurred before the debtor filed for bankruptcy.

Communications that overtly demand payments, coerce the recipient to provide payment, or lack an informational purpose are barred after the bankruptcy filing, Judge Mildred Caban Flores wrote May 24.

Oriental Bank, which knew about the bankruptcy of debtors Jose Luis Quiles Vazquez and Raquel Eunice Dietsch Martinez, said that the account statements were issued by mistake due to a “technical error” in their computer system.

But that’s not a valid defense, and several other courts have rejected it, the court said.

A “creditor’s internal disorder doesn’t excuse it from violating the automatic stay,” it said, citing In re Wedco Manufacturing Inc.

The statements were coercive in nature even though they didn’t demand payment, the court held. The statements indicated that payment should be made at a specific time and provided the debtors’ account balance, amount due, due date, and interest payable.

Two other account statements for a different account merely informed them of new fees and earnings on interest. These statements didn’t violate the automatic stay, the court said.

Almeida & Davila PSC, San Juan, P.R., represented Vazquez and Martinez. Jaime Ruiz Saldana, San Juan, P.R., represented Oriental Bank.

To contact the reporter on this story: Diane Davis in Washington at

To contact the editor responsible for this story: Jay Horowitz at

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