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Discharge Injunction Not Violated When Creditor Did Not Receive Notice at Proper Address

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Morris v. State Employees Credit Union, 615 B.R. 189 (Bankr. D.Md. 2020)(Alquist, J.)

Plaintiff/Debtor had a credit card through SECU, which was identified and listed as an unsecured creditor on the creditor mailing matrix.  The Debtor used an address for SECU identified on her credit report. In reality, SECU neither owns the address listed on the Plaintiff’s credit repot nor has a branch there. In the months leading up to the bankruptcy filing, SECU had sent credit card statements to the Debtor which identified the proper correspondence address for SECU.  All of the mail from the Court to SECU was returned as undeliverable and the Plaintiff/Debtor did not correct SECU’s address.

The Plaintiff/Debtor brought an action against SECU for violating the discharge injunction as, after the discharge was entered, SECU sent three collection letters to the Debtor and instituted a collection action in state court. Federal Courts have held bankruptcy courts have jurisdiction to enforce the discharge injunction through contempt proceedings. The burden of proof for the Plaintiff is “clear and convincing” evidence. A violation of the discharge injunction, alone, is insufficient to support a finding of contempt – the Plaintiff must show that the violation is willful, that the Defendant has knowledge of the bankruptcy case and acted intentionally.

A specific code provision (§342(c)(2)(A)) provides that if a creditor, within 90 days before commencement of the bankruptcy case, supplies the debtor in at least two communications to the debtor the address at which the creditor requests to receive correspondence, than any notice required by this title to be sent by the debtor to such creditor shall be sent to such address.

The Court held that SECU did not violation the discharge injunction as it did not receive proper notice.

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