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Mixup over debtor’s name no defense to discharge-violation claim

As reported in WestlawNext, Mixup over debtor’s name no defense to discharge-violation claim (Bkrtcy.D.N.J.)
(August 26, 2015) – A dental provider violated bankruptcy’s discharge injunction by attempting to collect a debt discharged in a couple’s bankruptcy, a New Jersey bankruptcy judge has ruled, rejecting the creditor’s contention it lacked knowledge of the bankruptcy because of variations in one spouse’s name. In re Andrade et al., No. 13-22850, 2015 WL 4940047 (Bankr. D.N.J. Aug. 18, 2015).
U.S. Bankruptcy Judge John K. Sherwood of the District of New Jersey awarded the debtors damages and attorney fees, saying they proved they had notified the creditor of the discharge.
Carlos Andrade and Mariella Nunez-Andrade filed for Chapter 7 bankruptcy in June 2013.
One of the debts they listed in their court papers was $248 owed by Nunez-Andrade to oral surgery provider Garden State OMS.
The couple received a discharge in September 2013 and the bankruptcy case was closed nine months later.
In December 2014 Garden State’s attorney, James C. Bender, filed a state court action on Garden State’s behalf against Nunez-Andrade attempting to collect the $248 debt, according to Judge Sherwood’s opinion.
Upon receipt of the complaint, Andrade telephoned Bender’s office to inform the firm about the bankruptcy discharge, and he received a return call assuring him the collection case would be dismissed, the bankruptcy opinion said.
But the state court case was not dismissed, and the firm continued to pursue its claim against the debtors, Judge Sherwood’s opinion said.
In April the debtors filed a motion to reopen their bankruptcy, alleging that Garden State and Bender had violated the discharge injunction provided under Section 524 of the Bankruptcy Code11 U.S.C.A. § 524.
The creditor and its attorney opposed reopening, asserting they were unaware of the bankruptcy because the name on the medical intake was “Mariella Nunez,” whereas the bankruptcy petition said “Mariella Nunez-Andrade,” according to the opinion.
Garden State and Bender also claimed OMS had provided an invoice on which Nunez-Andrade’s first name was misspelled “Marela,” and that OMS had given the firm an incorrect Social Security number for Nunez-Andrade, the opinion said.
The motion to reopen proceeded to a hearing.
To prove a discharge injunction violation, a debtor must show that a discharge order existed, and that the creditor knew about the order and disobeyed it, Judge Sherwood said.
Based on evidence provided at the hearing, the judge rejected the contention by Garden State and its attorney that they had no knowledge of the order.
The Andrades’ counsel said at the hearing that in addition to calling the Bender firm to tell the attorney about the bankruptcy, she also emailed the firm a copy of the discharge order, Judge Sherwood explained. Furthermore, she provided the court with a copy of the email.
“The evidence provided by the debtors clearly shows the debtors gave the … firm a copy of the discharge order,” the judge wrote. “Despite the debtors’ efforts to stop prosecution, the law firm pursued the state court action.”
Judge Sherwood therefore granted the motion to reopen and found that Garden State and Bender had violated the discharge injunction.
The judge awarded the Andrades $800 in legal fees and $500 in damages. He also enjoined Garden State and its attorney from further collection efforts and said any state court judgments they might receive on the debt were vacated.
By Aaron Rolloff