Discharge Injunction Violations Can’t Be Heard in Federal District Court

June 21, 2024

Discharge Injunction Violations Can’t Be Heard in Federal District Court

Circuits are split on whether claims for contempt of the discharge injunction must be brought in the bankruptcy court that issued the discharge.

Lorem ipsum dolor sit amet consectetur, adipisicing elit. Soluta dolorem consequuntur corporis pariatur rem aliquam similique animi fugiat iure explicabo eius omnis minima labore natus, repellat aut odio fuga vero. Lorem ipsum dolor sit amet consectetur, adipisicing elit. Soluta dolorem consequuntur corporis pariatur rem aliquam similique animi fugiat iure explicabo eius omnis minima labore natus, repellat aut odio fuga vero.

Lorem ipsum dolor sit amet consectetur, adipisicing elit. Soluta dolorem consequuntur corporis pariatur remaliquam similique animi fugiat iure explicabo eius omnis minima labore natus, repellat aut odio fuga vero. Lorem ipsum dolor sit amet consectetur, adipisicing elit. Soluta dolorem consequuntur corporis pariatur remaliquam similique animi fugiat iure explicabo eius omnis minima labore natus, repellat aut odio fuga vero.

ABI MEMBERS ONLY

ABI Membership is required to access the full summary. Please Sign in using your ABI Member credentials.

Not a Member yet? Try Us Out!

Sign up to receive Rochelle's Daily Wire and try out our membership for 30 days. When you do — you'll see why our members "Think ABI First."

Learn More

Opinion Link

View Opinion

https://abi-opinions.s3.amazonaws.com/Henry%2C+Sarah.pdf

Case Details

Case Citation

Henry v. Collection Professionals Inc., 23-00721 (N.D. Ill. June 17, 2024)

Case Name

Henry v. Collection Professionals Inc.

Case Type

Consumer

Court

7th Circuit

Illinois

Illinois Northern District

Bankruptcy Tags

Automatic Stay

Venue/Jurisdiction

Consumer Bankruptcy

Discharge/Dischargeability

Comments

Submitted by Douglas Tabachnik on June 21, 2024

Is the lesson here that in such situations, a motion to withdraw the reference on subject matter jurisdictional grounds is suggested in tandem with the complaint in District Court?

Submitted by Robert Lawless on June 21, 2024

Yes, I agree that withdrawal of the reference would be appropriate, but also I think the legal basis for the claims needs to be unpacked. First, there could be a claim that a violation of the discharge injunction satisfies the statutory requirements in the FDCPA, perhaps as an attempt to collect an amount not authorized by the agreement or permitted by law. 15 USC § 1692f(1). Second, there could be a claim that there is a private right of action for a violation of the discharge injunction, but most every court (except Bessette) rejects that. Third, there could be a motion to hold the creditor in (civil) contempt for violating the discharge injunction. It is this last claim with which a withdrawal of the reference fits most comfortably. There is an intersection of these claims and arbitrability. The first two claims--the FDCPA and the implied private right of action, would be subject to an arbitration agreement. Only the court that issued an order can hear the contempt motion. The other two claims vindicate private rights of the debtor and do not implicate the collective nature of a bankruptcy case. For those with little else to do, you can read my article "Reframing Arbitration & Bankruptcy" at 96 Am. Bankr. L.J. 202 (2022).