In Re Henry

266 B.R. 457 (2001)

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Nature of the Case

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Facts

Ps filed their chapter 7 bankruptcy on November 19, 1997. Ps were represented by counsel in their bankruptcy case. Associates (D) held a first mortgage on Ps' principal residence with a balance of approximately $119,900. Ps intended to surrender their 1986 Dodge Ram 'upon demand,' and that they intended to retain their house, their retirement accounts, and their 1994 Chevy Astrovan. Ps did not claim that their home was exempt property. The trustee filed a no-asset report, and the case was closed on March 17, 1998, a week after the discharge was entered. The debtors received their discharge on March 9, 1998. The discharge order states in part: 'All creditors whose debts are discharged by this order . . . are enjoined from instituting or continuing any action or employing any process or engaging in any act to collect such debts as personal liabilities of the above-named debtor.' Ps made mortgage payments to D. Ultimately, D foreclosed on the house on November 17, 1998, because the debtors were unable to make their post-bankruptcy payments. D purchased Ps' property at the eventual foreclosure sale D resold it for $ 105,000 nine months later. Ps moved out of the house on January 15, 1999. The district court referred six issues to the bankruptcy court to determine in connection with Ps' class action: Whether D's collection activities violated the automatic stay under § 362 of the Code? Whether Dt's collection activities violated § 524(a)(2) of the Code and the related bankruptcy discharge? Whether D's failure to take reasonable steps to reaffirm prepetition debt was a deliberate circumvention of § 524(c) of the Code? Whether d's actions constitute civil contempt for violations of the automatic stay under § 362 and § 524(a)(2) of the Code and the related Bankruptcy discharge? Whether D violated any other provisions of the Code? Whether D is liable for any damages, sanctions, and costs associated with violations of the Code and the amount of such liability?