South Carolina Bankruptcy Court Rejects “Computer Error” Excuse for Automatic Stay Violation

A recent ruling from the United States Bankruptcy Court for the District of South Carolina delivers a clear warning to landlords and creditors: automated systems and software mistakes are not valid excuses for violating the automatic stay in a bankruptcy case.

In In re Jennings, Case No. 26-01068-EG (note their is a prior In Re Jennings published case in SC Bankruptcy Court), the Bankruptcy Court examined whether a landlord violated the automatic stay after sending post-petition eviction notices to debtors who had filed Chapter 7 bankruptcy. While the Court ultimately denied the debtor’s request for sanctions, the decision provides important guidance for debtors, landlords, creditors, and every bankruptcy attorney handling stay violation litigation.

What Happened in the Bankruptcy Case?

Debtors filed a voluntary Chapter 7 bankruptcy petition on March 10, 2026, in the United States Bankruptcy Court for the District of South Carolina (Columbia, SC) . After filing bankruptcy, one of the debtors filed a Motion for Sanctions alleging that Green Alpha Property Management violated the automatic stay by sending post-bankruptcy collection and eviction notices.

The automatic stay is one of the strongest protections available under the Bankruptcy Code. Once a debtor files Chapter 7 or Chapter 13 bankruptcy, creditors generally must stop all collection activity immediately. That includes:

• Eviction efforts;
• Collection letters;
• Lawsuits;
• Wage garnishments;
• Foreclosure
• Repossession attempts; and
• Telephone collection efforts.

According to the Court’s Order, the landlord sent two notices after the bankruptcy filing:

• A 30-Day Notice to Vacate dated April 1, 2026; and
• A 5-Day Notice to Vacate dated April 6, 2026 threatening eviction proceedings if payment was not made.

The debtor argued these notices violated the automatic stay under 11 U.S.C. § 362(k).

The Landlord Claimed the Notices Were Sent by “Computer Error”

At the hearing, the landlord admitted the notices were mailed after the Chapter 7 bankruptcy filing. However, the landlord argued the violations were not “willful” because they resulted from mistakes involving newly implemented property management software.

The landlord’s representative testified that:

• The first eviction notice was accidentally generated during software training;
• The system automatically mailed notices to multiple tenants;
• The debtor was later told to disregard the notice; and
• The second notice was also sent automatically because of another software-related error.

The landlord further argued the software issue had been corrected and was no longer an ongoing problem.

This type of defense appears frequently in bankruptcy litigation. Creditors often claim collection notices were generated automatically or mailed because of clerical oversight. Bankruptcy courts, however, have repeatedly held that automated errors do not shield creditors from liability.

Bankruptcy Court Rejects the “Computer Did It” Defense

Judge Gasparini rejected the landlord’s argument that the stay violation was not willful.

The Court relied on prior bankruptcy decisions holding that creditors remain responsible for actions taken by their automated systems, employees, and software programs after receiving notice of bankruptcy.

The Order cited several cases, including:

• In re Defeo;
• In re Duby;
• Rijos v. Vizcaya;
• In re Silk;
• In re Nixon; and
• In re Romero.

Importantly, the Court emphasized that a debtor does not need to prove the creditor intended to violate the automatic stay. Instead, once a creditor receives notice of a Chapter 7 or Chapter 13 bankruptcy filing, the creditor has an affirmative duty to ensure collection activity stops.

The Court specifically warned that creditors must take steps to prevent their computer systems and staff from automatically generating collection notices during a pending bankruptcy case.

That language is significant for landlords, mortgage servicers, debt collectors, and collection agencies operating automated systems.

Why the Debtor Still Lost the Motion

Although the Bankruptcy Court found the landlord’s conduct satisfied the “willfulness” requirement, the debtor still lost the motion because she failed to prove damages.

Under 11 U.S.C. § 362(k), a debtor seeking damages for violation of the automatic stay must prove:

1. A bankruptcy petition was filed;
2. The debtor qualifies as an individual under the Bankruptcy Code;
3. The creditor had notice of the bankruptcy filing;
4. The violation was willful; and
5. The debtor suffered actual damages.

The Court concluded the debtor failed to establish the final element.

The debtor sought:

• Actual damages;
• Emotional distress damages;
• Financial damages; and
• Punitive damages.

However, the debtor failed to appear at the hearing and did not present testimony or admissible evidence supporting those claims. In my opinion, this is a very important factor. I think the Court may have viewed this case differently if the Debtors had appeared to testify.

Although hospital records were attached to one filing, the Court ruled the records were not properly authenticated under the Federal Rules of Evidence and therefore could not be considered.

The Court also noted there was no evidence connecting the debtor’s medical treatment to the landlord’s conduct.

Because the debtor failed to provide concrete proof of damages, the Bankruptcy Court denied the Motion for Sanctions.

Important Lessons for Bankruptcy Debtors

This South Carolina bankruptcy decision highlights several important issues for individuals filing Chapter 7 or Chapter 13 bankruptcy.

1. Debtors Must Present Evidence

A debtor cannot rely solely on allegations in a motion. Bankruptcy courts require admissible evidence establishing actual harm caused by the stay violation.

That may include:

• Medical records;
• Testimony;
• Financial documents;
• Witness testimony; and
• Properly authenticated exhibits. This is where having the Debtors at the hearing may have helped.

2. Debtors Must Attend Hearings

The debtors in Jennings failed to appear at the hearing after the Court denied their request for remote appearance.

Failure to appear can seriously damage a debtor’s ability to prove a case, especially when emotional distress damages are requested.

3. Automatic Stay Damages Are Not Automatic

Even where a creditor clearly violates the automatic stay, courts still require proof of actual damages before awarding sanctions.

An experienced bankruptcy attorney can help debtors gather evidence, authenticate records, and properly present testimony necessary to support a claim. This is an important reminder to Bankruptcy attorneys when consulting with their clients on whether to bring a stay violation case.

Important Lessons for Creditors and Landlords

The Order also sends a strong message to creditors and landlords involved in bankruptcy matters. This is important for creditors that they cannot rely on the excuse it was a computer mistake.

Once notice of a bankruptcy filing is received, collection activity must stop immediately. That obligation extends to:

• Automated software systems;
• Property management programs;
• Collection databases;
• Auto-generated notices; and
• Third-party collection vendors.

A creditor cannot avoid liability by blaming software, employee mistakes, or automated processes.

For businesses operating in high-volume collection environments, this case demonstrates why compliance procedures are critical. A knowledgeable bankruptcy attorney can help businesses create safeguards that reduce the risk of stay violations and sanctions.

Final Takeaway

The Jennings decision reinforces two important principles in bankruptcy law. Lessons for both Debtors and Creditors.

First, creditors remain responsible for automatic stay violations caused by computer systems and clerical errors after notice of a bankruptcy filing. No longer can creditors use the excuse that it was a computer mistake,

Second, debtors pursuing sanctions must provide competent evidence proving actual damages. As I stated earlier, it is very important for the Debtor to attend the hearing and specifically prepare to enter evidence of actual damages. I think Debtors can be successful in obtaining damages in a 362 violation case with this Court, however, it is clear that Debtors and Debtors’ attorneys must be specific in their damage claims and also work to enter in evidence exhibits. On a side note, Debtors’ attorneys may also want to consider claiming 105 damages in their complaint to give the Court more flexibility in giving the Debtors damages if the Court believes in the Debtors’ claims.

For individuals considering Chapter 7 or Chapter 13 bankruptcy, understanding the protections provided by the automatic stay is essential. If creditors continue collection efforts after a bankruptcy filing, consulting with an experienced bankruptcy attorney can help determine whether legal remedies are available. Please call the Stone Law Firm to set up a free consult