Violating Discharge Order: No First Bite Free

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David A. Szwak

Violating Discharge Order: No First Bite Free

Postby David A. Szwak » Tue Oct 25, 2005 8:56 pm

In re Evans,
289 B.R. 813, Bankr.E.D.Va., Sep 09, 2002

On rule to show cause why bank and its counsel should not be held in contempt for violating discharge injunction, the Bankruptcy Court, Robert G. Mayer, J., held that: (1) where bank's replevin action was filed in face of clear evidence suggesting that debtor no longer had possession of leased property, replevin action would be treated as subterfuge to recover discharged prepetition debt, which exposed bank to sanctions for willfully violating discharge injunction; and (2) monetary awards that were entered against bank, for violating discharge injunction by trying to use replevin action as subterfuge to collect discharged prepetition debt, would be assessed jointly and severally against both bank and its counsel.
Judgment against bank and counsel.

As damages for bank's violation of discharge injunction, in using replevin action as subterfuge to attempt to recover discharged prepetition debt for sums owing under motor vehicle lease, debtor was entitled to compensatory damages in amount of $1,000, based on four days of wages he lost to attend hearings both in replevin action and in bankruptcy court, but was not entitled to award based on his alleged pain and suffering, due to lack of evidence to support such a claim or to permit court to quantify debtor's loss, or based on speculation that, but for adverse credit report traceable to replevin action, debtor allegedly would have obtained better paying job.

Although bank's violation of discharge injunction, in using replevin action as subterfuge to attempt to recover discharged prepetition debt, entitled debtor to reasonable attorney fees, fees would be reduced from the $41,117.51 sought to $24,954.00, due to excess time entries resulting from fact that debtor was represented by two attorneys in bankruptcy court, both of whom were present throughout trial.

Bank's violation of discharge injunction, in using replevin action as subterfuge to attempt to recover discharged prepetition debt, was sufficiently egregious to warrant award of punitive damages, in amount of $2,500, in order to vindicate orders of bankruptcy court and to act as deterrent to similar conduct in future, even though bank and its counsel were not shown to have engaged in similar misconduct in past.

Punitive damages are not restricted to cases involving multiple violations of discharge injunction.

Monetary awards that were entered against bank, for violating discharge injunction by trying to use replevin action as subterfuge to collect discharged prepetition debt, would be assessed jointly and severally against both bank and its counsel, where counsel was architect of this misconduct, having controlled replevin action and manner in which it was pled and prosecuted.

HelpMe2006
Posts: 214
Joined: Sat Feb 25, 2006 5:46 pm

Postby HelpMe2006 » Sat Feb 25, 2006 7:09 pm

I have a VERY similar situation -

I filed for chapter 7 bankruptcy and it was discharged and closed. A cable company was notified of the filing and the automatic stay and of the discharge of debtor.

Before the filing, the cable company sent me a final bill - of which they charged me for the equipment I still had. So the final bill was for the service used and the equipment. So they basically sold me the equipment and charged me for it.

In the bankruptcy filing, I listed the equipment on my schedule B, property, and listed the entire bill balance on my schedule F, creditors.

The entire bankruptcy was discharged.

Then I was notified by the cable company that I had a balance due for the non returned equipment. I told them that they sold and billed me for the equipment and the total amount was discharged in the bankruptcy. They insisted that I still owed them either the amount that they billed me for the equipment or the return of the equipment.

In order to get new cable service I was required to either pay for the equipment or return it.

I know this isn’t right because their entire bill was discharged though the bankruptcy.

Are they trying to use subterfuge to recover discharged debt?

David A. Szwak

Postby David A. Szwak » Sun Feb 26, 2006 6:01 pm

They held you hostage to pay for the equipment after discharge. They have a right to refuse to do future business with you if they like. They can ask you to pay the old discharged debt as part of a deal to give you new service. As with debt past a statute of limitations ["prescribed" for those of you in Louisiana], you can reaffirm it and begin to "owe" it again. The truth is that even when a debt becomes judicial unenforceable via bankruptcy or running of a statute, there still exists a "moral obligation" to pay which alone is not judicially enforceable. However, a moral obligation exists and if you affirmatively act to reaffirm the debt then it can revive itself to a judicially enforceable debt anew.

Many junk debt collectors [buying prescribed or discharged debt] make a market out of tricking consumers into reaffirming debt and or reaging it on credit reports [which is their only real axe to the consumer's neck to get paid].

HelpMe2006
Posts: 214
Joined: Sat Feb 25, 2006 5:46 pm

Postby HelpMe2006 » Sun Feb 26, 2006 6:16 pm

Even before applying for new service I was informed that I still owed the amount for the non returned equipment. They are claiming that the equipment was "outside the scope" of my bankruptcy.

They sold me the equipment and billed me for it.
The total bill amount was discharged in bankruptcy.
I listed the equipment as property
I listed them as creditors with the total amount.

:?:

David A. Szwak

Postby David A. Szwak » Sun Feb 26, 2006 6:35 pm

[quote="HelpMe2006"]Even before applying for new service I was informed that I still owed the amount for the non returned equipment. They are claiming that the equipment was "outside the scope" of my bankruptcy.

They sold me the equipment and billed me for it.
The total bill amount was discharged in bankruptcy.
I listed the equipment as property
I listed them as creditors with the total amount.

:?:


That may constitute a discharge violation. Did you ask your BK Attorney about this? He might know something about the way it was dealt with in the BK that I do not know. I consider it abandoned and they cannot later claim it.