Opinion ID: 200684
Heading Depth: 2
Heading Rank: 1

Heading: Settlement Negotiations Concerning Denial of Discharge

Text: 8 We begin with the issue of whether negotiations regarding a § 727 challenge to discharge are ever permissible, or if such negotiations should be considered a per se violation of the automatic stay. 1 9 The automatic stay is one of the fundamental protections that the Bankruptcy Code affords to debtors. Jamo v. Katahdin Federal Credit Union ( In re Jamo ), 283 F.3d 392, 398 (1st Cir.2002). Under 11 U.S.C. § 362(a)(6), the filing of a bankruptcy petition operates as an automatic stay of any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case. Section 727 is a specific exemption from the automatic stay to allow for a challenge to discharge. 10 Whether settlement negotiations pertaining to a challenge to discharge violate the automatic stay is an issue of first impression in this Court. Recently, however, we held that, while the automatic stay is in effect, a creditor may engage in post-petition negotiations pertaining to a bankruptcy-related reaffirmation agreement so long as the creditor does not engage in coercive or harassing tactics. Jamo, 283 F.3d at 399. We agree with the parties that it makes sense to extend the Jamo rule and adopt the majority approach allowing settlement negotiations in § 727 discharge proceedings. See generally Terrence L. Michael and Michael R. Pacewicz, Settling Objections to Discharge in Bankruptcy Cases: An Unsettling Look at Very Unsettled Law, 37 Tulsa L.Rev. 637 (2002) (reviewing the approaches to the settlement of § 727 proceedings and indicating that the majority of courts allow settlement on a case-by-case basis). Absent controversy on the point, we need not belabor the issue.