Court Finds That Bank of America Willfully Violated Debtors’ Bankruptcy Discharge

May 2nd, 2010 by Reed Allmand

Bank of America Violated DischargeIn the Chapter 7 bankruptcy case of McClure, Danny J. and Kimberly D.; In re (McClure v. Bank of America, et al.), the bankruptcy court found that the creditor Bank of America (BoA) and the collection agency willfully violated the discharge injunction and awarded the debtors $2,500 in compensatory damages and $79,839 in attorney’s fees.

The details of the bankruptcy case:

When the debtors filed for Chapter 7 relief they scheduled several debts owed to Bank of America. None of the debts was excepted from the debtors’ discharge, which was granted on Nov. 15, 2007. Two of the debts were personal guarantees of business credit cards issued by BoA to a cor­poration substantially owned by the debtors. That company filed for bankruptcy at the same time as the debtors. The BoA accounts were scheduled in the corporate bankruptcy. Shortly after they received their discharge, the debtors were contacted by a collection agency regarding the business accounts. The debtors asked the bankruptcy court to find that BoA, the collection agency, and the collectors assigned the accounts willfully violated the discharge injunction. The court found that BoA did because it knew of the debtors’ bankruptcy. The court found that the collection agency did not willfully violate the debtors’ discharge when it attempted to collect the first account, but did when it attempted to collect the second account because it was informed of the bankruptcy filing in response to the collection effort on the first account.

Although the collection agency’s computer system did not transmit information about the debtors’ bankruptcy, this fact did not excuse the violation.  The bankruptcy court found that collection agency’s procedures for detecting a bankruptcy were faulty and the court awarded the debtors $2,500 in actual damages to compensate them for the time and effort spent prosecuting the case. BoA and the col­lection agency were both sanctioned by the bankruptcy court. BoA was sanctioned in the amount of $100,000 and the collection agency in the amount of $50,000.

avatar

About Reed Allmand

Website

Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

View all posts by Reed Allmand

Subscribe

Subscribe to our e-mail newsletter to receive updates.

FAQ

Why do I need to submit a new wage order when I modify my plan

When we modify your bankruptcy plan we are changing your plan payments. This means that we have to get with your employer and change the terms and amount of your wage order. The only way we can do that is by filling out a new wage order form.  

Learn More
What happens if the stay terminates on my home?

If the bankruptcy stay terminates on your home that means that even though your in bankruptcy, your creditor can pursue all there legal remedies they can pursue if you were not in bankruptcy. This includes foreclosure, and having your house sold and evicting you from your house.

Learn More

Find Location

map
  • Dallas Bankruptcy

    5646 Milton Street, Ste. 120 Dallas, Texas 75206
  • Fort Worth Bankruptcy

    860 Airport Freeway, Suite 401, Hurst, Texas 76054
  • More Locations

Meet Our Clients