Dear Bankruptcy Adviser,
I have filed for bankruptcy and I am waiting for my court date. But in the meantime, my old landlord levied my bank account. This happened just two days ago, well after I had filed for bankruptcy. Is it legal for my old landlord to levy my account at this point? Doesn't bankruptcy provide me protection from creditors? How would you suggest I go about getting my funds returned?
-- Kris

Dear Kris,
All creditor activity must stop when you file bankruptcy. The legal term is that creditor actions are automatically "stayed" by the filing of the bankruptcy. Creditors executing lawsuits, wage garnishments, foreclosures, evictions (in most cases) and bank levies must stop all activities.

But your specific situation is a bit complicated. So let's divide the answer into two parts -- the easy part and the hard part.

The easy part: Putting everyone on notice that you filed bankruptcy.

In your case, the landlord must be notified that you filed bankruptcy, and he or she must be given the opportunity to return the money. Make sure the landlord was on your list of creditors. If he or she was not, you must immediately add him or her onto the bankruptcy schedules.

You must also notify the sheriff's department via fax and mail of the bankruptcy filing. However, the sheriff does not have any legal obligation to simply give you the money back. You may be obligated to prove that the funds were taken after you filed your case.

This is tricky because all sheriff's departments do not handle this issue the same way. The sheriff's department was told via court order to execute the levy against your bank account. The sheriff may hold on to the money until either given a bankruptcy court order to release the money, notification from the creditor to release the funds or, sometimes, notification from the bankruptcy trustee that the funds are exempt -- protected in bankruptcy.

The hard part: Getting the money back.

Most banks, credit unions, collection agencies or law firms will comply with the bankruptcy law and notify the court and the sheriff. In the vast majority of cases, that is all you need to do, and the levied funds will be returned in a few weeks.

However, individuals, like a landlord of a small building, tend to be more stubborn and believe that they are in the right. This is why it can be difficult to get the money back.

The sheriff may release the funds to the landlord, even though the funds are protected, unless instructed otherwise. You may have the law on your side because the landlord may have violated the automatic stay imposed by the bankruptcy. But being right does not guarantee the right result.

You can pursue your bankruptcy without an attorney, but this type of situation could require legal assistance. Unless the landlord knows the law and is willing to comply, you could be forced to bring an action against the landlord inside the bankruptcy. That means you would have to file a motion for violation of the automatic stay. That will be time-consuming and could be costly. And it will not get the money back quickly.

It is possible the landlord simply needs notification of the bankruptcy, and then will dismiss the lawsuit and notify the sheriff that the levy has been released. While that does happen in the majority of cases, you could be in for a fight.