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Margaret Kinney v. HSBC Bank USA

Summarizing by Lars Fuller

In re Martin

In re Martin, BAP 6th Cir., Case No. 11-8052
Bankruptcy Appellate Panel upheld sanctions against creditor for violation of discharge injunction. Creditor willfully violated discharge injunction when he filed a post-discharge state court lawsuit where (1) the parties had not entered into a reaffirmation agreement during the pendency of the debtor's case; (2) the debtor's voluntary post-petition payment did not obligate her to continue making payments to the creditor; (3) the parties did not enter into a new contract for payment of the debt because mutual assent and consideration independent of the discharged debt were both lacking. The creditor's mistaken belief that his actions were somehow outside the scope of 524(a)(2) does not remedy a violation of the discharge injunction. As such, the debtor was entitled to an award of actual damages for the violation, including her attorneys' fees.
Procedural context:
Appeal from the United States Bankruptcy Court for the Northern District of Ohio, Eastern Division at Cleveland. No. 09-13675. Appeal from order holding creditor in contempt for violation of discharge injunction and awarding debtor damages in the amount of $4,045.
In 2006, prior to bankruptcy, debtor agreed to purchase a business from creditor, which included monthly payment of $1,700 to creditor. Debtor began to have financial difficulties and offered to give business back to creditor. Creditor did not want business back and offered to lower monthly payments to $800 per month. Debtor agreed. In 2009, debtor filed a chapter 7 petition and listed the creditor and again offered to return the business to creditor. Debtor did continue making $800 monthly payments after discharge. Debtor ceased making payments in late 2009. In 2010, creditor sued debtor in state court alleging debtor had voluntarily entered into an oral agreement to continue making payments post-petition. Debtor moved to reopen bankruptcy case for purpose of enforcing discharge injunction. Bankruptcy court entered order for creditor to show cause why he should not be held in contempt for violating discharge injunction and ultimately found creditor in contempt ordering him to pay actual damages in the amount of $4,045.
EMERSON, FULTON, and PRESTON. Opinion by Hon. Thomas J. Fulton

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