(7th Cir. July 20, 2015)
The Seventh Circuit holds that the bankruptcy court abused its discretion in issuing a contempt order and awarding damages to the debtor for the creditor’s alleged violation of the discharge injunction. The creditor’s adversary proceeding had been dismissed for failure to establish the creditor had standing to enforce a state court judgment. The judgment was then discharged. The creditor then went back to state court and obtained an order that stated a prior assignment of the judgment to the creditor had always been valid. The bankruptcy court held this violated the injunction. This court holds that obtaining the state court order was not an act to collect a discharged debt and it was not a collateral attack on the bankruptcy court’s orders. Opinion below.
Author: Matt Lindblom