Violating the Discharge Order:Carriere v. Proponent FCU

Information that should and should not be reported where there is a bankruptcy.
David A. Szwak

Violating the Discharge Order:Carriere v. Proponent FCU

Postby David A. Szwak » Sun Oct 23, 2005 9:09 pm

Carriere v. Proponent Federal Credit Union
Not Reported in F.Supp.2d, 2004 WL 1638250
Jul 12, 2004

"Proponent asserts that Carriere has failed to plead a violation of a discharge injunction under 11 U.S.C. § 524. Section 524(a)(2) provides that a discharge
"operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived."
Section 524(a)(2) protects the debtor from any formal or informal attempts to collect a personal liability. Walker v. M & M Dodge, Inc., 180 B.R. 834, 842 (W.D.La.1995). These attempts include: "(1) commencing an action on such debt; (2) continuing such an action already initiated; or (3) employing process to collect on such debt, e.g., through the use of garnishment or attachment writs." Walker, 180 B.R. at 842 (quoting 3 Collier on Bankruptcy, ¶ 524.01). All informal actions to collect, including "telephone calls, letters, threats to collect or initiate legal action, intimidation intended to enforce payment, and personal contacts to collect or recover," are barred as well. Id. at 842-43. "Even a mere threat to enforce a surviving lien will violate the injunction if the evidence demonstrates that the threat is truly an effort to coerce payment." Id.

In the complaint, Carriere alleged that Proponent "failed to comply with the bankruptcy discharge order," and that such acts and omissions in violating the discharge order were "willful, intentional and designed to cause harm to plaintiff." (Complaint, ¶¶ 89, 90). Alternatively, Carriere asserts that Proponent's acts in violating the order were "negligent." (Complaint, ¶ 91).

Proponent argues that Carriere failed to allege that it intended to "collect a debt" when it reported to credit reporting agencies that Carriere's loans had been "charged off." However, there is no requirement that plaintiff plead that the credit furnisher intended to collect a debt when it filed an adverse report. As noted by the court in Singley v. American General Finance, 233 B.R. 170 (S.D.Ga.1999), reconsideration denied, 236 B.R. 105 (Bankr.S.D. Ga. June 21, 1999), which was relied upon by Proponent, "[t]he Court is unable to conclude, based on the facts presented by Movant [for summary judgment] ... that Movant did not act with the intent to collect the debt from [plaintiff] when it made the report to the credit bureau." Id. at 173. In other words, until the parties have had an opportunity to conduct discovery, the Court cannot determine what Proponent's intent might have been when it reported that Carriere's debts had been "charged off." See also, In re Weinhoeft, 2000 WL 33963628, *2 (Bkrtcy.C.D.Ill.2000) ("even if it is shown that the Bank's reports to the credit-reporting agencies contain truthful information, such a report, if made with the intent to harass or coerce a debtor into paying a pre-petition debt, could be deemed a violation of the automatic stay. [citations omitted]. On this point alone, Debtors have clearly pleaded facts which, if proven true, would entitle Debtors to relief.").

Rule 8(e) of the Federal Rules of Civil Procedure provides that "[e]ach averment of a pleading shall be simple, concise, and direct. No technical forms of pleading or motions are required." Subsection (f) provides that "[a]ll pleadings shall be so construed as to do substantial justice." Proponent cites no authority to support its argument that plaintiff is required to plead that its adverse reporting was made "with the intent to collect" a debt. [FN5]

FN5. For example, fraud or mistake is required to be pled with particularity under Rule 9(b), as is a reply to an Order under Rule 7(a). Schultea v. Wood, 47 F.3d 1427, 1433 (5th Cir.1995).

Accordingly, the undersigned recommends that the motion to dismiss this claim be DENIED."

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