Effect Discharge

EFFECT OF DISCHARGE, AND DISCHARGE INJUNCTION– § 524

In re Heilman, 430 B.R. 213 (9th Cir. BAP 2010)

Where only one spouse files a chapter 7 bankruptcy, a community debt is discharged only

as to the filing spouse. A subsequent dissolution decree that obligated the debtor to hold the

nondebtor harmless as to the debt that was discharged did not create a new postpetition obligation,

because it did not comply with the requirements for a reaffirmation agreement.

In re Kimmel, 378 B.R. 630 (9th Cir. BAP 2007), aff’d, 302 Fed. Appx. 518 (9th Cir. 2009).

Section 524(a)(3) discharges community debts of both the debtor and nondebtor spouse,

unless the creditor timely files a dischargeability action in the debtor’s case. The injunction

applies to after-acquired community property .

In re ZiLOG, Inc., 450 F.3d 996, 1007-1010 (9th Cir. 2006)

Court can infer knowledge of a discharge injunction from the fact that the creditor knew of

the bankruptcy, but such an inference is a question of fact, not a presumption implied in law.

“Knowledge of the injunction, which is a prerequisite to its willful violation, cannot be imputed; it

must be found.”

In re Ybarra, 424 F.3d 1018 (9th Cir. 2005), cert. denied, 547 U.S. 1163, 126 S.Ct. 2328 (2006)

“[W]e reaffirm that claims for attorney fees and costs incurred post-petition are not

discharged where post-petition, the debtor voluntarily commences litigation or otherwise

voluntarily ‘returns to the fray’. . . .Whether attorney fees and costs incurred pre-petition may be

discharged depends on whether the debtor has taken affirmative post-petition action to litigate a

prepetition claim and has thereby risked the liability of these litigation expenses.” Discharge here

did not apply to post-chapter 7 fees and expenses.

In re Gurrola, 328 B.R. 158 (9th Cir. BAP 2005)

Equitable estoppel did not arise from the debtor’s failure to raise his bankruptcy discharge

as a defense to a collection action on a prepetition debt. The effect of a discharge is selfexecuting.

In re Garske, 287 B.R. 537 (9th Cir. B.A.P. 2002)

Debtor who opted to continue payments on vehicle upon which debt had been discharge

was not the subject of unlawful harassment by creditor under § 524, where telephone calls merely

sought payments as a condition to retaining the vehicle.

In re Bennett, 298 F.3d 1059 (9th Cir. 2002)

Case remanded to determine whether attorney fees should be awarded to the debtor as

sanctions for having to defend a suit brought in violation of § 524

Walls v. Wells Fargo Bank, N.A., 276 F.3d 502 (9th Cir. 2002)

§ 524 does not provide a private right of action for violation of the discharge injunction,

although it can be enforced through contempt proceedings.

In re Bassett, 255 B.R. 747 (9th Cir. B.A.P. 2000), aff’d in part, denied in part, 285 F.3d 882 (9th

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Cir. 2002), cert. denied, 537 U.S. 1002 (2002)

There is no private right of action for violation of § 524, but the discharge injunction may

be enforced through civil contempt proceedings.

In re Lawson, 122 F.3d 1237 (9th Cir. 1997)

§ 727(a)(2) – “Continuing concealment” found, even though transfer occurred more than

one year prior to bankruptcy.

In re Hines, 147 F.3d 1185 (9th Cir. 1998)

Debt to attorney paid by post-dated checks for assisting in converting case from 13 to 7

was not discharged as a prepetition debt. Hessinger followed.

In re Watson 192 B.R. 739 (9th Cir. B.A.P. 1996), aff’d, 116 F.3d 488 (9th Cir. 1997)

Superior Court’s determination that discharge injunction did not apply to postpetition debt

had preclusive effect.

In re Cortez, 191 B.R. 174 (9th Cir. B.A.P. 1995)

Unavoided unperfected security interest survives discharge.

In re Lowenschuss, 67 F.3d 1394 (9th Cir. 1995), cert. denied, 517 U.S. 1243 (1996)

§ 524(e) precludes bankruptcy courts from discharging the liabilities of non-debtors.

American Hardwoods, Inc., 885 F.2d 621 (9th Cir. 1989). 1994 Asbestos Amendment. § 524(a)

also cited as support.

In re Getzoff, 180 B.R. 572 (9th Cir. B.A.P. 1995)

Creditor may not recover on guaranty executed postpetition where guaranty was not made

in compliance with requirements for reaffirming discharged debt.

Hedges v. Resolution Trust Corp (In re Hedges), 32 F.3d 1360 (9th Cir. 1994), cert. denied, 514

U.S. 1082 (1995)

Debtor continued to reside in property after a foreclosure sale and then filed bankruptcy.

The court held that the permanent injunction under § 524(a)(2) did not bar the purchaser at the

foreclosure sale from evicting the debtor or collecting postpetition rent.

In re Beeney, 142 B.R. 360 (9th Cir. B.A.P. 1992)

“An action naming the debtor solely to establish the debtor’s liability in order to collect on

an insurance policy is not barred by Bankruptcy Code § 524.”

Kathy B. Enterprises, Inc. v. United States, 779 F.2d 1413, 1414-15 (9th Cir. 1986)

Bankruptcy court not authorized to discharge debts of nondebtors

Underhill v. Royal, 769 F.2d 1426, 1432 (9th Cir. 1985)

Bankruptcy court cannot discharge liability of nondebtor as part of plan

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