Fighting Back!

A couple filed for Chapter 7 relief under the bankruptcy code and discharged their debts.  Apparently ignoring all of this, Bank of America pursued the Humphreys after the bankruptcy case for a debt that was discharged, which violated the discharge injunction of 11 U.S.C. Section 524 of the bankruptcy code.  The bankruptcy court found that the bank contacted the Humphreys 38 times - even though the Humphreys and their lawyer told the bank to stop, that the debt had been discharged in bankruptcy. The Humphreys did not take this lightly, but rather went back into bankruptcy court and asked for relief.  The bankruptcy court judge awarded the Humphreys the legal fees they incurred ($2500) and awarded them an additional $10,000 for the distress the situation caused.

See In re James C. Humphrey, Jr., and Shannon L. Humphrey, 2012 Bankr. Lexis 1113, (Bankr. M.D. Fla. 3/24/12) (Arthur B. Briskman, Bankruptcy Judge).

Here's a summary of the case:

In re: JAMES C. HUMPHREY, JR. and SHANNON L. HUMPHREY, Debtors.

Case No. 6:10-bk-17756-ABB, Chapter 7

UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF FLORIDA, ORLANDO DIVISION

2012 Bankr. LEXIS 1113

March 14, 2012, Decided

OVERVIEW
: Chapter 7 debtors filed a motion to reopen their bankruptcy case and a motion seeking sanctions against a bank national association ("bank"), claiming that the bank violated 11 U.S.C.S. § 524(a) when its agents contacted the debtors after a debt they owed the bank's predecessor was discharged pursuant to 11 U.S.C.S. § 727 and demanded that the debtors pay the debt. The court held a hearing on the debtors' motion for sanctions.  The debtors declared bankruptcy in October 2010, that they listed a home loan servicing business as a secured creditor that was owed $153,598. The court sent notice of the debtors' bankruptcy case to the business; however, the business did not did not seek relief from the automatic stay or otherwise make an appearance in the debtors' case, and the debtors received a discharge pursuant to 11 U.S.C.S. § 727 in January 2011. A bank acquired the mortgage on the debtors' property and it agents contacted the debtors on 38 occasions after they received their discharge, demanding payment. The court found that the bank violated the discharge injunction that was imposed pursuant to 11 U.S.C.S. § 524(a) and caused the debtors emotional distress, and it awarded the debtors $10,000 in damages and 2,500 in attorney's fees. The bank's agents continued to contact the debtors after the bank was informed by the debtors and their attorney that the debt was discharged, and in doing so they willfully and intentionally violated the discharge injunction and acted in bad faith. The debtors' damages included significant aggravation, emotional distress, inconvenience, and attorney's fees.
DECISION: The court found that the debtors were entitled to an award of actual damages pursuant to 11 U.S.C.S. § 105(a) and the court's inherent power to hold parties in contempt of court, and it awarded the debtors $12,500 plus interest and enjoined the bank from taking any further collection action against the debtors.