Citizens Bank Of Maryland v. David Strumpf

516 U.S. 16 (1995)


P filed Chapter 13. P had a checking account with D. P was in default on a remaining balance of a loan of $5,068.75 from d. Under § 362(a), the bankruptcy filing gave rise to an automatic stay of various types of activity by his creditors, including 'the setoff of any debt owing to the debtor that arose before the commencement of the [bankruptcy case] against any claim against the debtor.' § 362(a)(7). Eight months later, D placed an 'administrative hold' on so much of P's account D claimed was subject to set off. P then claimed the administrative hold violated the automatic stay established by § 362(a). The Bankruptcy Court ruled the 'administrative hold' constituted a 'setoff' in violation of § 362(a)(7) and sanctioned D. Several weeks later, the Bankruptcy Court granted D's motion for relief from the stay and authorized D to set off P's remaining checking account balance against the unpaid loan. But, P had reduced the checking account balance to zero, so there was nothing to set off. The District Court reversed, concluding that the administrative hold was not a violation of § 362(a). The Court of Appeals reversed. 'An administrative hold,' it said, 'is tantamount to the exercise of a right of setoff and thus violates the automatic stay of § 362(a)(7).' The Supreme Court granted certiorari.