Rafael Velez Fonseca v. Government Employees Association (AEELA)

Rafael Velez Fonseca v. Government Employees Association (AEELA), No. 15-033 (1st Cir. B.A.P. Dec. 25, 2015)
The Bankruptcy Appellate Panel for the First Circuit AFFIRMS the opinion and order of the bankruptcy court below finding that the bankruptcy court did not err in concluding that (1) AEELA had a valid statutory lien in the debtor's prepetition accumulated leave, and AEELA was permitted to proceed against the lump sum proceeds of the collateral due to the debtor upon termination of his employment to recover the balance due on AEELA's claim; (2) letters sent by AEELA to the Municipality of Caugus were not an attempt to collect a debt from the debtor in personam; and (3) AEELA's actions did not violate the discharge injunction.
Procedural context:
Rafeal Velez Fonseca, (the "Debtor"), appeals from a bankruptcy court's opinion and order granting motion for summary judgment filed by Government Employee's Association aka Asociación de Empleados del Estado Libre Asociado de Puerto Rico ("AEELA") and denying the Debtor's cross-motion for summary judgment, on the Debtor's complaint against AEELA for alleged violations of the discharge injunction under 11 USC 524(a).
AEELA is a non-profit savings and loan association established by Puerto Rico law. AEELA is authorized to grant loans to its members from a savings and loan fund. The Debtor was a government employee and member of AEELA until he retired in December 2012. In May and June of 2012, the Debtor signed two promissory notes for loans from AEELA. In August 2012, the Debtor filed a chapter 7 petition. In November 2012, the bankruptcy court entered an order discharging the Debtor and closed the case. In January 2013, AEELA issued a letter to the Municipality of Caguas requesting the balance of the Debtor's accumulated vacation and sick leave and indicating the Debtor had a pending debt balance. The Debtor then filed a complaint seeking damages for alleged violation of the discharge injunction. AEELA filed a motion for summary judgment arguing that it did not attempt to collect the debt from the Debtor personally but rather proceed against the collateral which included the payment for the accumulated pre-petition leave.
Feeney, Deasy and Cary.

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