Creditors Trying To Collect After You File Bankruptcy

A bankruptcy discharge “operates as an injunction against the commencement or continuation” of any act to collect or recover a debt as a personal liability of the debtor. [ 11 USCA § 524(a)(2); Matter of Edgeworth, M.D. (5th Cir. 1993) 993 F.2d 51, 53; see also In re McGhan (9th Cir. 2002) 288 F.3d 1172, 1175] Any action or process “to collect, recover or offset any (discharged) debt as a personal liability of the debtor” is enjoined. 11 USCA § 524(a) (2)

In other words, the order discharging and relieving a debtor of his debts acts as an injunction that prohibits any creditors from engaging in acts to recover the debt at the time of the filing of the bankruptcy petition.
Any postdischarge attempt to collect or recover on debt as a personal liability of the debtor is properly a basis for civil contempt proceedings. [ Walls v. Wells Fargo Bank, N.A. (9th Cir. 2002) 276 F.3d 502, 507] Your continued efforts at collecting money from my clients can and will subject you to being held in contempt of court.

The court may order the creditor to pay you compensatory damages, plus attorney fees and costs, as sanctions for violating a § 524(a)(2) discharge injunction. [ Walls v. Wells Fargo Bank, N.A., supra, 276 F.3d at 507.
Loss of income resulting from related court appearances may also be recoverable. [See In re Barbour (BC ED NC 1987) 77 B.R. 530, 531] If the debtor has to take off work to bring this contempt action the creditor could be held liable for his loss of income (in addition to attorneys fees, costs, etc.)

In California even if the creditor had not been given notice in the original bankruptcy papers, all debts are discharged regardless of whether the creditor received notice in a no asset case. A case is a no-asset case if all the debtor’s property was exempt. Almost all of my cases are of this type. Beezley v. Calif. Land Title Co. (In re Beezley), 994 F.2d 1433 (9th Cir. 1993)

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