Willful Violation of Bankruptcy Discharge Excused For Good Faith Error
April 15, 2008
In the recent case of in-re-eady.pdf, Adv. Pro. No. 07-90271-jm (S.D. Cal. 2008) the court excused a creditor’s alleged violation of the discharge injunction and granted summary judgment against the debtor. The Court found that the acts of the defendant, alleged by the plaintiff to be violations of 11 U.S.C. § 524, were conducted by defendant with a good faith and reasonable belief that such acts were not prohibited by the bankruptcy discharge injunction in the plaintiffs bankruptcy case.
This flies in the face of the bankruptcy discharge injunction, and the prohibitions of the US Bankruptcy Code. What the court in Eady failed to realize was the the Code prohibits collection activities against a debtor once a discharge has been issued. It is incumbent upon a creditor to ensure that it refrains from such prohibited activities, and the argument put forth here amount to what I like to call the, “Stupidity Rule.”
If you’re too stupid to read the law, dear creditor, that’s alright - we forgive you.
The defendant in this case, however, is not stupid. In fact, the website maintained by the creditor clearly states that its entire business model centers around bankruptcy.
How can such a defendant be deemed too stupid to know the law, and the consequences of its actions?
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