Discharge Injunction Violation

Perhaps you are a consumer who is facing mountains of debt. The debt load does not allow you to rest. You cannot eat, sleep, or perform normally routine activities because you are overwhelmed by debt. Some days you prefer to just stay in your bed because of the debt. You borrowed money from everyone you know and are having difficulty repaying. Your phone is ringing with debt collectors demanding payment. Letters arrive in the mail with threatening words about unpaid debt.

Fed up with your circumstances, you file for bankruptcy. Perhaps you filed for Chapter 7 and went through a “straight bankruptcy.” Perhaps you filed for Chapter 13 and submitted a bankruptcy plan to a judge. The judge approved the plan and you paid the trustee the agreed-upon amounts for five years. You are now entitled to a bankruptcy discharge.

You appear before a bankruptcy judge who considers the matter and issues a ruling in your favor. Congratulations, you achieved a discharge of debt and have successfully rid yourself of the debt. More importantly, you rid yourself of all those worries.

You are now living life after bankruptcy. Due to the judge’s court order, most or all of your creditors cannot collect from you. Thus, even though the automatic stay of the bankruptcy is no longer in effect, your debt is no longer in play.

Suppose a creditor or creditors, seizing on the end of the bankruptcy process, try to collect their debts from you? As mentioned, you attained a bankruptcy discharge, so you have no obligation to pay those debts. Your pre-bankruptcy creditors are no longer your creditors. What remedies or recourse do you have if such creditors violate the discharge injunction (which is the bankruptcy court order declaring your debts discharged)?

Discharge Injunction Violation

If creditors violate a discharge injunction, the pre-bankruptcy debtor has some options. One option is to file a motion against the creditor for violating section 524 of the Bankruptcy Code, the discharge injunction. A court, in such a case, has the ability to charge the creditor with actual damages, punitive damages, and attorney’s fees and costs. Punitive damages, as the name suggests, is a measure used to punish the violator for willfully contravening a court order. Costs refer to court filing costs and similar associated costs.

Another option is to file a motion seeking a declaration of contempt of court. As mentioned, a discharge injunction is a court order. Willful disregard for a court order can be considered being in contempt of court. The punishment would be similar to a motion for violating a discharge injunction.

Similarly, a pre-bankruptcy debtor can also seek damages for negligent or intentional infliction of emotional distress. While such a tort has a high bar of proof, a pre-bankruptcy debtor may be able to prove that he or she suffers emotional distress from the creditor. After going through the bankruptcy process, which followed a difficult period of running up large sums of debt, the creditor’s behavior may be so over the top that a judge would find that the creditor is responsible for inflicting emotional distress.

Drowning in debt? Bankruptcy may be right for you. Contact the consumer bankruptcy law firm of Melanie Tavare, a Bay-area debt relief firm.