The injunction is formally issued pursuant to 11 U.S.C. 362(a), commonly referred to as the Automatic Stay provision of the bankruptcy code, and it prohibits creditors from making further attempts to collect the debt. Sometimes those collection efforts include harassing telephone calls, threatening letters, garnishments, or even the filing of a lawsuit after the bankruptcy case has been filed.
If a creditor has knowledge that you have filed for bankruptcy protection and continues their efforts at collection, then, pursuant to 11 U.S.C. 362(a) the creditor may be sued in bankruptcy court for violating the Automatic Stay provision. However, in order to prevail in such a lawsuit one must prove that the creditor had actual knowledge of your bankruptcy filing. If you can not prove that the creditor actually knew about the bankruptcy filing, then you will not be able to recover monetary damages against the creditor.
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For example, in the case of Gaddy, 20 CBN 1155 (Bankr. N.D. Ill 2010) the debtor tried to sue her former landlord because the landlord sent a letter to her employer requesting the employer to deduct her past due rent from her paycheck. In that case, however, the debtor did not even list her landlord on the bankruptcy schedules and thus the court held that the landlord could not be sued for an intentional violation of the Automatic Stay provisions because he had no notice of her filing.
No creditors are immune from being sued for 11 U.S.C. 362(a), including the Internal Revenue Service. In order to sue the Internal Revenue Service for violating 11 U.S.C. 362(a), one must show that all of the administrative remedies have been exhausted first in order to be able to collect monetary damages. In the case of Swensen vs. United States, 20 CBN 1162 (Bankr. ND Iowa 2010), the court noted that pursuant to 26 USC Section 7433 the debtor must exhaust all administrative remedies before a recovery can be made of attorney fee under 26 USC 7430. In particular the court relied upon In re Kuhl, 467 F. 3d 145 (2d Cir. 2006) in holding that before damages or attorney fees may be recovered, that the administrative remedies must be exhausted.
In Swensen, supra, the court ruled that Swensen had failed, pursuant to 26 C.F.R. Section 301.7433-1and 301.7430-1, to file an administrative claim in writing to the Chief Local Insolvency Unit for her district prior to filing her petition in bankruptcy court.
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The law in this area can be very technical, but had Gaddy listed her landlord on her bankruptcy petition she would have had a much easier time of proving that her landlord had actual knowledge of the bankruptcy filing. Likewise, had Swensen pursued the administrative procedure, she, too would have been able to file a claim against the Internal Revenue Service for violating the Automatic Stay provisions.
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