Discharge Violations

Countrywide has just been spanked to the tune of $55,000 for a discharge violation involving a mortgage.  Debtor’s counsel is providing the details here. The basic facts are that Debtor filed a Chapter 7, did not reaffirm the mortgage, received discharge, surrendered the property and then got harassed (pretty endlessly from the looks of things) by Countrywide trying to collect on the debt.

Countrywide’s collection actions included phone calls, billing statements, and reporting the balance as still owed on the Debtor’s credit report.  Debtor’s counsel claims that Countrywide received no less than 16 notices of Bankruptcy and demands to stop the improper conduct.

The debtor claimed damages in the form of emotional distress, credit problems resulting in higher interest rates and a lower credit score, and some kind of problem with an adoption.

Clearly, this is not your run of the mill discharge violation.  Countrywide was not only persistent but when your counsel tells debtor’s counsel on the phone to “take it to court” you are really asking for trouble.

It has been my experience that Judge’s hate discharge violation cases.  They want to be sure that it isn’t just a stupid mistake and that Debtor’s counsel has fired a warning shot before filing the Adversary Proceeding.  Even so, they appear to be reluctant to award serious damages.

When I was a young lawyer representing creditors, I was taught to be terrified of violating the automatic stay or the discharge violation.  That doesn’t seem to be the case anymore, and frankly, a lot of the problem comes from Courts who don’t have a whole lot of respect for their own orders.  That needs to change, and in my office it is going to.


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