Expert: Mark J. Markus- California Bankruptcy Attorney - 1/29/2009

Question
QUESTION: On December 5th 2008 I filed a small claim in Massachusetts against Circuit City for damage caused to my 11 year old sons laptop.  The damage occurred on November 13th 2008.  Circuit City refused to repair the laptop but did offer me a gift card which I refused. Today I received a letter from their attorney stating I was violating the automatic stay and if I did not dismiss the case in 10 days they could take action against me. Circuit City filed their petition on November 10, 2008 in Virginia. Can I take Circuit City to small claims court without them seeking damages against me?  Would this be considered new debt?  I am not a creditor.

ANSWER: With the dates you just listed, it is clearly a violation of the automatic stay and you need to dismiss the case since it was filed in violation of the automatic stay.  You need to file a claim in the Chapter 11 case and you will share in whatever distribution other creditors in your class get (which will not likely be very much, if anything unfortunately).

---------- FOLLOW-UP ----------

QUESTION: Thank you for your quick response.  I was told by another source who is not an "expert" in this field that "post petition creditors are afforded the same rights as if the Chapter 11 was never filed".  Just to be sure, is that post-petition information I was given by someone else incorrect?

Answer
That's strange.  I already posted a follow up answer to this.  Anyway, the issue is whether you are in fact a post petition creditor.  On what dates did Circuit City damage your laptop? On what basis are they responsible for damage to your son's laptop?  If this is a warranty claim, then you are seeking to recover on a pre-petition warranty and what the warranty covers may or may not determine whether your claim "arose" post petition or not.   This is a potentially complicated issue and by far the safest thing to do is to file a Motion for Relief from the AUtomatic Stay in the bankruptcy case to get permission to proceed with your small claims action (as well as to ratify the filing of the initial action).  However, that may cost you more than you are seeking in your claim.