Opinion ID: 2830279
Heading Depth: 1
Heading Rank: 3

Heading: Violation of the Discharge Injunction

Text: As the bankruptcy court and the district court recognized, Venture Bank did not necessarily violate the discharge injunction simply because it accepted monthly payments made pursuant to Change in Terms Agreements that are unenforceable. Discharge “operates as an injunction against . . . an act, to collect, recover or offset any [discharged] debt as a personal liability of the debtor.” 11 U.S.C. § 524(a)(2). But discharge does not “prevent[] a debtor from voluntarily repaying any debt.” -8- § 524(f). After trial, the bankruptcy court concluded that Venture Bank violated the discharge injunction because the “Bank’s communications and post-petition conduct were designed to obtain payments and enforce the debt” and therefore Howard’s monthly payments under the post-discharge Change in Terms Agreements were involuntary. On appeal, Venture Bank argues that the bankruptcy court’s finding of involuntariness was clearly erroneous because Howard testified at trial that he made the payments “voluntarily” to induce the Bank to refinance his mortgages, and because Howard, not the Bank, initiated discussions about making payments for that purpose.3 We disagree. “Voluntary” as used in § 524(f) is defined “in an objective sense as referring to repayment that is free from creditor influence or inducement, regardless of whether the debtor was motivated by forces unrelated to the creditor.” DuBois, 276 F.3d at 1023 (quotation omitted). The term must be understood in the context of a discharge injunction that “is intended to preclude virtually all actions by a creditor to collect personally from the debtor.” In re Nassoko, 405 B.R. 515, 52122 (Bankr. S.D.N.Y. 2009) (quotation omitted). “[T]he ‘coerciveness’ involved in each case must be assessed on its particular facts.” In re Pratt, 462 F.3d at 20. Here, ample evidence of pressure and inducement supports the bankruptcy court’s finding of involuntariness. The Bank encouraged Howard to believe that, if he made regular payments, it would consider helping him refinance his home. It then 3 Venture Bank did not argue to the bankruptcy court, and does not argue on appeal, that its conduct in seeking payments from Howard was protected by § 524(j), which states that § 524(a)(2) “does not operate as an injunction against an act by a creditor that is the holder of a secured claim, if (1) such creditor retains a security interest in real property that is the principal residence of the debtor; (2) such act is in the ordinary course of business between the creditor and the debtor; and (3) such act is limited to seeking or obtaining periodic payments associated with a valid security interest in lieu of pursuit of in rem relief to enforce the lien.” Accordingly, we need not consider this fact-intensive issue. -9- required him to sign agreements obligating him to repay the entire discharged debt, rather than continue to make monthly payments, and sent numerous emails reminding him that payments were “due” and seeking payment of additional principal and interest. The Bank’s “Marginal & Substandard Loan Improvement/Workout Plan” listed as an “action item” that the Bank “[k]eep the pressure on [Howard] for principal reductions.” Unlike DuBois, where post-discharge fees from a pre-petition automobile lease were folded into a new lease, 276 F.3d at 1021, Venture Bank did not refinance the three mortgages on the Lapideses’ home. It simply dangled the possibility of refinancing to induce Howard to sign agreements promising to repay the entire discharged debt. The bankruptcy court did not clearly err in finding that Howard’s payments were not voluntary within the meaning of § 524(f). Accordingly, the district court did not err in affirming the bankruptcy court’s decision that Venture Bank violated the discharge injunction. The judgment of the district court is affirmed. _____________________________ -10-