Bankruptcy Ct. erred in denying debtor’s request to hold creditor in contempt of court for seeking to collect on debt in state court proceeding one year after Bankruptcy Ct. had previously discharged said debt. Record showed that debtor had failed to notify either state court or creditor’s law firm that debt had been discharged, although creditor had been notified of said discharge through notice given by Bankruptcy Ct. As such, creditor was guilty of contempt under agency principles for actions taken by its law firm in seeking continued collection efforts, since creditor was aware of discharge order. However, Bankruptcy Ct. could properly deny instant request to hold law firm in contempt of court, since: (1) said law firm lacked knowledge of discharge order; and (2) court could not impute client-creditor’s knowledge of discharge order to law firm. Ct. further observed that Dist. Ct. could take into consideration debtor’s failure to notify either state court or creditor’s law firm of discharge order when determining any damages for debtor.
Federal 7th Circuit Court
Civil Court
Bankruptcy