A Circuits Split Does the Bankruptcy Code Implicitly Repeal the FDCPA

Journal Issue

Oct 2006

Column Name

Code to Code

Bankruptcy Code

524

Topic Tags

Consumer Bankruptcy

Discharge/Dischargeability

Automatic Stay

Journal HTML Content

As most observers acknowledge, the automatic stay and the discharge injunction
are the two cornerstones of consumer bankruptcy law. They are, respectively,
a fundamental debtor protection and a fundamental debtor objective.1
The automatic stay benefits debtors by allowing them to be free from virtually
all collection efforts during the pendency of the bankruptcy case, and, having
successfully completed the bankruptcy process, the discharge provides debtors
with a "new opportunity in life and a clear field for future effort, unhampered
by the pressure and discouragement of pre-existing debt."2 Despite
the protection afforded to debtors by §§362 and 524 of the Bankruptcy
Code, collection efforts may still continue, either intentionally or through
oversight and negligence. Enforcing a violation of the automatic stay or a violation
of the discharge injunction, or both, is arguably not limited to a remedy provided
by federal bankruptcy law.
As recognized by Congress more than two decades ago, debt-collection activities
by third parties was, and continues to be, a substantial business that touches
the lives of millions of Americans. Widespread abuse in the process of debt
collection prompted Congress in 1977 to enact the Fair Debt Collection Practices
Act (FDCPA), 15 U.S.C. §§1692-1692o, which was designed to protect
consumers from an array of unfair, harassing and deceptive debt-collection practices
without imposing unnecessary restrictions on ethical debt collectors.3
An apparent violation of the FDCPA can be enforced by a consumer through an
action in either federal or state court.4 Significantly, a collection
action violative of the FDCPA may also offend the automatic stay while a case
is pending or the discharge injunction after the bankruptcy case is concluded.
To that end, an important consumer bankruptcy question is whether a debtor can
seek redress under both the Code and the FDCPA. As it stands, the two federal
circuit courts that have addressed this issue are in direct conflict. While
the Ninth Circuit Court of Appeals has found that the Code implicitly repeals
the FDCPA, the Seventh Circuit Court of Appeals has held otherwise, namely that
the Bankruptcy Code and the FDCPA can harmoniously coexist, thereby affording
a debtor an action under both federal statutes.

Debtor Protection under §§362 and 524 
Section 362 is perhaps the most fundamental provision in the Code. Not only
does the automatic stay provide a debtor with breathing room by stopping virtually
all collection efforts while the stay remains in place,5 it benefits
creditors by establishing an orderly framework for the administration of the
bankruptcy estate and prevents the piecemeal decimation of the debtor's existing
assets.6 The Code provides debtors with a protection mechanism for
violations of the automatic stay. Section 362(k)(1)7 provides that
"an individual injured by any willful violation of a stay provided by this
section shall recover actual damages, including costs and attorneys' fees and,
in appropriate circumstances, may recover punitive damages."8
In seeking sanctions against a creditor pursuant to §362(k), the debtor
bears the burden of demonstrating that the actions taken were in violation of
the automatic stay, the violation was willful and the conduct caused harm to
the debtor.9 To prove a "willful" violation of the automatic
stay, the debtor does not need to demonstrate that the creditor possessed the
specific intent to violate the stay.10 Rather, it is sufficient for
the debtor to show that the creditor was aware of the bankruptcy case and that
the creditor's actions that violated the stay were intentional.11
While the imposition of actual damages is mandatory upon a finding of a willful
violation of §362, an award of punitive damages rests within the discretion
of the court and is ordinarily granted in circumstances where the creditor "has
demonstrated egregious, vindictive or intentional misconduct."12

The second significant policy underlying bankruptcy law is the notion of a
"discharge."13 The legal effect of a bankruptcy discharge
is relatively straightforward with respect to individual debtors: The entry
of a discharge "operates to release an individual debtor's in personam
obligation to pay pre-petition indebtedness and serves as a permanent injunction
against any act to collect a discharged debt."14 This freedom
from personal liability for pre-petition debt is known as the proverbial "fresh
start." Congress designed the permanent injunction to "'give complete
effect to the discharge, to eliminate any doubt concerning the effect of the
discharge as a total prohibition on debt collection efforts,' and to ensure
that 'once a debt is discharged, the debtor will not be pressured in any way
to repay it.'"15
Consequently, unless the individual debtor violates a proscribed form of behavior
contained within the Code16 or the particular debt is of a character
encompassed by §523 of the Code,17 an individual who files for
bankruptcy can ordinarily obtain a discharge from the majority of his or her
pre-existing debts in exchange for surrendering any existing nonexempt assets.18
Section 524(a)(2) of the Code provides that a discharge under title 11 "operates
as an injunction against the commencement or continuation of an action, the
employment of process, or an act, to collect, recover or offset any such debt
as a personal liability of the debtor, whether or not discharge of such debt
is waived...."19 Section 524(a)(2) was enacted to continue "post-discharge"
the temporary stay imposed by §362 when a case is first commenced.20
In short, §524(a)(2) replaces the automatic stay with a permanent injunction
against the enforcement of all discharged debts upon the entry of the discharge.21
The §524 injunction is intentionally broad in scope and is intended to
preclude virtually all actions by a creditor, both formal and informal, to collect
personally from the debtor, including telephone calls and letters.22
Accordingly, §524 protects the debtor from any act to collect a debt by
a creditor whose claim has been discharged in the bankruptcy case.23

Section 524(a) does not include a specific provision setting forth available
remedies for a violation of the discharge injunction. However, bankruptcy courts
employ §105 of the Code24 to enforce the discharge injunction
utilizing the mechanism of a civil contempt action.25 The discharge
injunction created by §524(a) is an order of the bankruptcy court, and
its violation is punishable by the imposition of civil sanctions.26
Courts impose sanctions for civil contempt under §105 of the Code upon
a showing of willfulness; that is, a court will find a party in contempt if
it knew that the discharge injunction was invoked and intended the actions that
violated the injunction.27 "In a civil contempt proceeding,
the state of mind with which the contemnor violated a court order is irrelevant,
and therefore good faith, or the absence of an intent to violate the order,
is no defense."28 Sanctions for a violation of the discharge
injunction may include actual damages, attorney's fees and, in some circumstances,
punitive damages.29

The Fair Debt Collection Practices Act 
The FDCPA was enacted in 1977 in response to "widespread" and "serious"
national concern regarding debt-collection abuses by third-party debt collectors.30
Notably, the FDCPA applies only to third-party debt collectors and not to direct
collection actions by creditors with respect to their own debt.31
The FDCPA specifically defines "debt" to mean "any obligation
or alleged obligation of a consumer to pay money arising out of a transaction
in which the money, property, insurance or services that are the subject of
the transaction are primarily for personal, family or household purposes, whether
or not such obligation has been reduced to judgment."32 Stated
differently, the FDCPA applies to transactions in which a consumer33
is offered the right to acquire money, property, insurance or services that
are primarily for household purposes and to defer payment of the debt.34
The FDCPA, therefore, does not apply to business-related or commercial debt.

As recognized in the legislative history to the FDCPA, debt-collection abuse
can occur in a variety of ways, including, but not limited to, the use of obscene
or profane language; threats of violence; telephone calls at unreasonable hours;
misrepresentation of a consumer's legal rights; disclosing a consumer's personal
affairs to friends, neighbors or an employer; obtaining information regarding
a consumer through false pretenses; impersonating public officials; and simulating
the legal process.35 Accordingly, the FDCPA makes this type of conduct
unlawful.36 In addition, §1692e of the FDCPA provides that a
debt collector "may not use any false, deceptive or misleading representation
or means in connection with the collection of any debt."37 This
provision of the FDCPA contemplates that the "false representation of the
character, amount or legal status of any debt" or "the threat to take
any action that cannot legally be taken or that is not intended to be taken"
is a violation of the statute.38 Section 1692e has particular relevance
to the consumer bankruptcy setting, both during the pendency of the automatic
stay and following discharge, because a dunning letter, telephone call or other
com-munication with the debtor claiming the debt is "immediately due and
payable" amounts to a false representation of the "legal status"
of the debt. Moreover, a "threat" to take action to collect the alleged
outstanding debt, which would amount to either a violation of the automatic
stay or the discharge injunction, also offends §1692e of the FDCPA.
The FDCPA is a strict liability statute and therefore does not require a showing
of intentional conduct on the part of a debt collector.39 Thus, even
an unintentional misrepresentation of the amount of the debt violates §1692e,40
and a single violation of the FDCPA is sufficient to establish civil liability.41
In determining whether a debt collector has violated the FDCPA, the majority
of courts apply an objective standard measured by how the "least sophisticated
consumer" would interpret the communication at issue.42 The
inquiry turns on whether an "unsophisticated consumer" would have
been misled by the communication.43 The objective standard of the
"least sophisticated consumer" serves dual purposes: "it (1)
ensures the protection of all consumers, even the naive and the trusting, against
deceptive debt collection practices, and (2) protects debt collectors against
liability for bizarre or idiosyncratic interpretations of collection notices."44
Because the FDCPA is aimed at curbing unscrupulous debt collectors, "there
is room within the [statute] for ethical debt collectors to make occasional
unavoidable errors without subjecting themselves to automatic liability."45
Specifically, under §1692k(c) of the FDCPA, a debt collector may avoid
liability if it can prove by a preponderance of the evidence that any violation
of the statute resulted from a "bona fide error," notwithstanding
"the maintenance of procedures reasonably adopted to avoid such error."46

Finally, §1692k provides for the imposition of civil liability against
any debt collector that has violated the statute. Under the FDCPA, a consumer
can recover any actual damages as a result of the failure to comply with the
statute, "additional damages" of not more than $1,000 per action,
costs of litigation and reasonable attorney's fees.47
Circuit Split: Ninth Circuit vs. Seventh Circuit 
In Walls v. Wells Fargo Bank N.A., 276 F.3d 502 (9th Cir. 2002), the
Ninth Circuit Court of Appeals concluded that a debtor may not prosecute simultaneous
claims against an offending creditor under both §105 of the Code and the
FDCPA. In Walls, Donna Walls filed a chapter 7 petition and listed a
pre-petition obligation of $118,000 owed to Wells Fargo Bank, secured by her
house.48 Walls continued to make payments to Wells Fargo Bank both
prior to and after her debt was discharged.49 At some point thereafter,
Walls ceased making payments and Wells Fargo Bank foreclosed on the house.50
The complaint filed by Walls in district court alleged that Wells Fargo Bank
failed to obtain a reaffirmation agreement after she filed for bankruptcy protection,
and "that her debts were discharged, giving rise to the discharge injunction
pursuant to §524(a)(2) and (c)."51 Walls maintained that
the bank's conduct of soliciting and collecting payments after she received
her discharge "was prohibited by §524 and was an unfair and unreasonable
means of collecting a debt under the FDCPA."52 Walls theorized
that since her bankruptcy case was "over and done with," she needed
to rely upon the FDCPA to protect her from unfair collection practices.53

The Ninth Circuit Court of Appeals disagreed with the argument advanced by
Walls. According to the Ninth Circuit, "there [was] no escaping" that
Walls' FDCPA claim was in actuality an action for an alleged violation of §524.54
In so finding, the Ninth Circuit Court of Appeals concluded as follows:
<blockquote>
To permit a simultaneous claim under the FDCPA would allow through the back
door what Walls cannot accomplish through the front door—a private right
of action. This would circumvent the remedial scheme of the Code under which
Congress struck a balance between the interests of debtors and creditors by
permitting (and limiting) debtors' remedies for violating the discharge injunction
to contempt. "A mere browse through the complex, detailed and comprehensive
provisions of the lengthy Bankruptcy Code... demonstrates Congress' intent
to create a whole system under federal control which is designed to bring
together and adjust all of the rights and duties of creditors and embarrassed
debtors alike." Nothing in either Act persuades us that Congress intended
to allow debtors to bypass the Code's remedial scheme when it enacted the
FDCPA. While the FDCPA's purpose is to avoid bankruptcy, if bankruptcy nevertheless
occurs, the debtor's protection and remedy remain under the Bankruptcy Code.55

</blockquote>
Thus, the Ninth Circuit Court of Appeals held that a debtor's sole remedy for
a violation of the discharge injunction exists under the Code, and a debtor
cannot bypass the Code's "remedial scheme" by filing an action against
a creditor under the FDCPA.56 The upshot of the Ninth Circuit Court
of Appeals's holding in Walls is that the Bankruptcy Code implicitly repeals
the FDCPA as a mechanism for debtors to curb post-discharge collection efforts
for debts that have indeed been discharged.
In direct contrast to the result reached in Walls, the Seventh Circuit Court
of Appeals in Randolph v. IMBS Inc., 368 F.3d 726 (7th Cir. 2004), concluded
that while the Code and the FDCPA certainly overlap in some respects, the Code
does not repeal the FDCPA. As such, under the Seventh Circuit Court of Appeals's
approach, a debtor can conceivably bring a claim against a creditor under both
the Code and the FDCPA. In Randolph, when Cheryl Alexander filed her
chapter 13 petition, she owed $1,125 to her dentist.57 Alexander
listed the debt on the schedule of unsecured, nonpriority claims; the dentist
was notified of the filing along with the identity of Alexander's attorney.58
The dentist filed a proof of claim, and the confirmed plan contemplated that
the debt be paid over time.59 Two years after plan confirmation the
dentist died, and his office hired Unlimited Progress Inc. to collect on old
accounts, including Alexander's.60 Unlimited Progress subsequently
sent a dunning letter to Alexander, which she proceeded to ignore.61
When Unlimited Progress sent a second dunning letter to Alexander, she forwarded
the letter to her attorney, who in turn contacted the debt collector and informed
it about the ongoing chapter 13 proceeding.62 Unlimited Progress
immediately closed its file and never again contacted Alexander. Nonetheless,
Alexander filed suit under the FDCPA, claiming that Unlimited Progress falsely
represented that she was required to pay the outstanding bill immediately.63
The parties consented to a decision by a magistrate judge, who concluded that
§362(h)64 preempted the FDCPA because the Code occupied the
field of debtor-creditor relations to the exclusion of other laws after a federal
bankruptcy proceeding is commenced.65

The Seventh Circuit Court of Appeals reversed the determination of the district
court and held that the Code, and in particular §362(h), does not implicitly
repeal the FDCPA as a statutory mechanism by which debtors can seek redress
from unlawful debt collection practices.66 When two federal statutes
address the same subject in different ways, a court must inquire as to whether
one statute implicitly repeals the other; to conclude that one statute implicitly
repeals another, a court needs to find "an irreconcilable conflict between
the statutes or a clear expressed legislative decision that one replace the
other."67 Because Congress did not express a legislative intention
that the Code displaces the FDCPA, the Seventh Circuit examined whether an irreconcilable
conflict existed between the two statutes. In doing so, the court compared the
"operational differences" between the statutes, noting that while
the statutes certainly overlap, the Code and the FDCPA did not present an irreconcilable
conflict.68 Therefore, according to the Seventh Circuit Court of
Appeals, a debtor can seek to enforce both the FDCPA and the Code, and "any
debt collector can comply with both simultaneously."69 As the
Seventh Circuit stated: "Overlapping statutes do not repeal one another
by implication; as long as people can comply with both, then courts can enforce
both."70
The Seventh Circuit noted the following differences between the Code and the
FDCPA: (1) the automatic stay can be violated by any creditor, while the FDCPA
only applies to "debt collectors"; (2) §362(h) affords no defense
to a creditor, while §1692k(c) provides a "bona fide error" defense
for a violation of the FDCPA; (3) the Code has no cap for damages, while the
FDCPA contains a $1,000 maximum "additional damages" provision per
action; (4) punitive damages may be awarded by a bankruptcy court for a violation
of the Code, while the FDCPA contains no provision for punitive damages; (5)
the Code contains no provision for the awarding of attorneys' fees to the debtor,
while §1692k(a)(3) of the FDCPA specifically provides for the recovery
of attorneys' fees; and (6) the Code contains no statute of limitations for
bringing an action for a violation of the stay,71 while §1692k(d)
provides for a one-year statute of limitations.72

Perhaps most significant to the Seventh Circuit's conclusion is the difference
in the "scienter" requirement to demonstrate a violation of each statute.
While §362(h) makes liability depend on the creditor's knowledge, §1692e(2)(A)
creates a strict-liability rule: "Debt collectors may not make false claims,
period."73 Contrary to the position reached by the district
court, the Seventh Circuit Court of Appeals determined that strict liability
under §1692k(c) would not interfere with the administration of bankruptcy
law established by Congress, particularly the willfulness requirement of §362(h).74
In analyzing the different scienter requirements between the Code and the FDCPA,
the Seventh Circuit stated as follows:
<blockquote>
They are simply different rules, with different requirements of proof and
different remedies... To say that only the Code applies is to eliminate all
control of negligent falsehoods. Permitting remedies for negligent falsehoods
would not contradict any portion of the Bankruptcy Code, which therefore cannot
be deemed to have repealed or curtailed §1692e(2)(A) by implication.
To the extent that Walls holds other-wise, we do not follow it....75

</blockquote>

Although the Ninth Circuit and Seventh Circuit adopted diametrically opposed
holdings regarding the intersection of the Bankruptcy Code and the FDCPA, the
majority of federal circuit courts have not addressed this issue. Consequently,
unless and until the federal circuit courts reach a consensus or the U.S. Supreme
Court elects to rule on this issue, attorneys representing consumers in all
jurisdictions, with the exception of the Ninth Circuit, should contemplate whether
an action under the FDCPA is another viable remedy in addition to an action
under §362(h), or §§105 and 524 of the Code.
<blockquote>
<blockquote>  </blockquote>
</blockquote>

<hr>
<h3>Footnotes</h3>
1 Curtis v. LaSalle Nat'l Bank (In re Curtis), 322 B.R. 470,
483 (Bankr. D. Mass. 2005) (citations omitted).

2 Local Loan Co. v. Hunt, 292 U.S. 234, 244-45, 54 S.Ct. 695, 699, 78
L.Ed. 1230 (1934) (citation omitted). 
3 S. Rep. No. 95-382, at 1-2 (1977), as reprinted in 1977 U.S.C.CA.N. 1695,
1696. 
4 See 15 U.S.C.A. §1692k(d) (West 2006). 
5 With the exception of the types of matters contained within §362(b)
of the Code. See, generally, 11 U.S.C.A. §362(b) (West 2006).

6 McCartney v. Integra Nat'l Bank N., 106 F.3d 506, 509 (3d Cir. 1997).
See also In re Atamian, No. 04-46088, 2006 WL 1677153, *3 (Bankr. D.
Mass. June 15, 2006) (citations omitted). 
7 Formerly §362(h) prior to the 2005 amendments to the Bankruptcy Code.

8 See 11 U.S.C.A. §362(k)(1) (West 2006). The 2005 amendments to
the Bankruptcy Code added subsection (k)(2), which provides as follows: "[i]f
such violation is based on an action taken by an entity in the good-faith belief
that subsection (h) applies to the debtor, the recovery under paragraph (1)
of this subsection against such entity shall be limited to actual damages."
11 U.S.C.A. §362(k)(2) (West 2006). 
9 Clayton v. King (In re Clayton), 235 B.R. 801, 806 (Bankr.
M.D.N.C. 1998) (citations omitted).

10 Id. at 807 (citations omitted). 
11 Diviney v. Bank of Texas (In re Diviney), 211 B.R. 951, 966
(Bankr. N.D. Okla. 1997). 
12 In re Clayton, 235 B.R. at 810-11. 
13 Jackson, Thomas H., "The Fresh-Start Policy in Bankruptcy Law,"
98 Harv. L. Rev. 1393, 1393 (1985) ("Discharge, the doctrine that frees
the debtor's future income from the chains of previous debts, lies at the heart
of bankruptcy policy"). See also Howard, Margaret, "A Theory
of Discharge in Consumer Bankruptcy," 48 Ohio St. L. J. 1047, 1047 (1987)
("That we should have some system of discharge in bankruptcy is a settled
question").

14 Singer, George H., "Section 523 of the Bankruptcy Code: The Fundamentals
of Nondischargeability in Consumer Bankruptcy," 71 Am. Bankr. L. J.
325, 325 (1997). Section 524 of the Bankruptcy Code describes the legal effect
of a discharge in a case under Title 11, subject however, to the limitations
to discharge contained in §523 of the Code. Section 524(a) of the Code
provides, in pertinent part, as follows: 
<blockquote>
A discharge in a case under this title: 
(1) voids any judgment at any time obtained, to the extent that such judgment
is a determination of the personal liability of the debtor with respect to
any debt discharged under §727, 944, 1141, 1228 or 1328 of this title,
whether or not discharge of such debt is waived; 
(2) operates as an injunction against the commencement or continuation of
an action, the employment of process, or an act, to collect, recover or offset
any such debt as a personal liability of the debtor, whether or not discharge
of such debt is waived; and 
(3) operates as an injunction against the commencement or continuation of
an action, the employment of process, or an act, to collect or recover from,
or offset against, property of the debtor of the kind specified in §541(a)(2)
of this title that is acquired after the commencement of the case, on account
of any allowable community claim, except a community claim that is excepted
from discharge under §523, 1228(a)(1) or 1328(a)(1) of this title, or
that would be so excepted, determined in accordance with the provisions of
§§523(c) and 523(d) of this title, in a case concerning the debtor's
spouse commenced on the date of the filing of the petition in the case concerning
the debtor, whether or not discharge of the debt based on such community claim
is waived.

</blockquote>
11 U.S.C.A. §524(a) (West 2006). In turn, §727(b) of the Code provides
for the legal effect of a discharge in a chapter 7 liquidation case as follows:

<blockquote>
Except as provided in §523 of this title, a discharge under [§727(a)]
discharges the debtor from all debts that arose before the date of the order
for relief under this chapter, and any liability on a claim that is determined
under §502 of this title as if such claim had arisen before the commencement
of the case, whether or not a proof of claim based on any such debt or liability
is filed under §501 of this title, and whether or not a claim based on
any such debt or liability is allowed under §502 of this title. 11 U.S.C.A.
§727(b) (West 2006). 
</blockquote>
15 Cherry v. Arendall (In re Cherry), 247 B.R. 176, 182 (Bankr.
E.D. Va. 2000) (citation omitted). See also In re Arnold, 206 B.R. 560,
564 n.3 (Bankr. N.D. Ala. 1997) ("Congress enacted §524(a) to insure
debtors are not pressured in any way to pay discharged debts").

16 Section 727(a) of the Code sets forth the grounds for denying a discharge
to a chapter 7 debtor. Pursuant to §727(a)(2)-(7), a chapter 7 debtor will
be denied a discharge if the debtor engages in the following forms of conduct:

<blockquote>
(2) the debtor, with intent to hinder, delay or defraud a creditor or an
officer of the estate charged with custody of property under this title, has
transferred, removed, destroyed, mutilated or concealed, or has permitted
to be transferred, removed, destroyed, mutilated or concealed— 
<blockquote>
(A) property of the debtor, within one year before the date of the filing
of the petition; or 
(B) property of the estate, after the date of the filing of the petition;

</blockquote>
(3) the debtor has concealed, destroyed, mutilated, falsified or failed to
keep or preserve any recorded information, including books, documents, records
and papers, from which the debtor's financial condition or business transactions
might be ascertained, unless such act or failure to act was justified under
all of the circumstances of the case;

(4) the debtor knowingly and fraudulently, in or in connection with the case—

<blockquote>
(A) made a false oath or account; 
(B) presented or used a false claim; 
(C) gave, offered, received or attempted to obtain money, property or advantage,
or a promise of money, property or advantage, for acting or forbearing to
act; or 
(D) withheld from an officer of the estate entitled to possession under
this title, any recorded information, including books, documents, records
and papers, relating to the debtor's property or financial affairs; 
</blockquote>

(5) the debtor has failed to explain satisfactorily, before determination
of denial of discharge under this paragraph, any loss of assets or deficiency
of assets to meet the debtor's liabilities; 
(6) the debtor has refused, in the case— 
<blockquote>
(A) to obey any lawful order of the court, other than an order to respond
to a material question or to testify; 
(B) on the ground of privilege against self-incrimination, to respond to
a material question approved by the court or to testify, after the debtor
has been granted immunity with respect to the matter concerning which such
privilege was invoked; or 
(C) on a ground other than the properly invoked privilege against self-incrimination,
to respond to a material question approved by the court or to testify;

</blockquote>
(7) the debtor has committed any act specified in paragraph (2), (3), (4),
(5) or (6) of this subsection, on or within one year before the date of the
filing of the petition, or during the case, in connection with another case,
under this title or under the Bankruptcy Act, concerning an insider. 
</blockquote>
11 U.S.C.A. §727(a)(2)-(7) (West 2006). A bankruptcy court will also deny
a discharge to a chapter 7 debtor if the debtor satisfies any of the conditions
specified in §727(a)(8)-(10). See 11 U.S.C.A. §727(a)(8)-(10) (West
2006). 
17 See generally 11 U.S.C.A. §523 (West 2006). 
18 See Jackson, supra note 13 at 1393.

19 11 U.S.C.A. §524(a)(2) (West 2006). 
20 Waswick v. Stutsman County Bank (In re Waswick), 212 B.R.
350, 352 (Bankr. D. N.D. 1997). 
21 Id. (citing Siragusa v. Siragusa (In re Siragusa),
27 F.3d 406 (9th Cir. 1994)).

22 Walker v. M&M Dodge Inc. (In re Walker), 180 B.R. 834,
842 (Bankr. W.D. La. 1995). 
23 4 Collier on Bankruptcy ¶524.02 (15th ed. rev. 2005). 
24 Section 105(a) provides, in part: "The court may issue any order, process
or judgment that is necessary or appropriate to carry out the provisions of
this title." 11 U.S.C.A. §105(a) (West 2006). 
25 Parker v. Boston Univ. (In re Parker), 334 B.R. 529, 537-38
(Bankr. D. Mass. 2005) (citations omitted).

26 In re Cherry, 247 B.R. at 187. 
27 Hardy v. United States, 97 F.3d 1384, 1389 (11th Cir. 1996). See
also In re Riser, 298 B.R. 469, 472 (Bankr. M.D. Fla. 2003) ("A creditor
may be liable for contempt under §105 if it willfully violates §524's
permanent injunction"). 
28 In re Cherry, 247 B.R. at 187 (citing McComb v. Jacksonville Paper
Co., 336 U.S. 187, 191, 69 S.Ct. 497, 499, 93 L.Ed. 599 (1949)). 
29 Id. at 187. A violation of the discharge injunction must be proven
by the debtor by clear and convincing evidence. See In re Parker, 334
B.R. at 538.

30 S. Rep. No. 95-382, at 2 (1977), as reprinted in 1977 U.S.C.C.A.N. 1695,
1696. 
31 Cooper v. Litton Loan Servicing, 253 B.R. 286, 291 (Bankr. N.D. Fla.
2000). Section 1692a(6) defines "debt collector" in relevant part
as "any person who uses any instrumentality of interstate commerce or the
mails in any business the principal purpose of which is the collection of any
debts, or who regularly collects or attempts to collect, directly or indirectly,
debts owed or due or asserted to be owed or due another." 15 U.S.C.A. §1692a(6)
(West 2006). Incidentally, the term "debt collector" includes attorneys
"when an attorney's principle [sic] business is debt collection or who
regularly collects the debts of another." Blakemore v. Pekay, 895
F. Supp. 972, 977 (N.D. Ill. 1995) (citation omitted). Further, law firms "regularly
engaged in debt collection are similarly constrained by the FDCPA." Id.
(citation omitted). 
32 15 U.S.C.A. §1692a(5) (West 2006). 
33 The FDCPA defines "consumer" as "any natural person obligated
or allegedly obligated to pay any debt." See 15 U.S.C.A. §1692a(3)
(West 2006).

34 Adams v. Law Offices of Stuckert & Yates, 926 F. Supp. 521, 525
(E.D. Pa. 1996) (citation omitted). 
35 S. Rep. No. 95-382, at 2 (1977), as reprinted in 1977 U.S.C.C.A.N. 1695,
1696. 
36 Specifically, §1692c(a) provides as follows: 
<blockquote>
Without the prior consent of the consumer given directly to the debt collector
or the express permission of a court of competent jurisdiction, a debt collector
may not communicate with a consumer in connection with the collection of any
debt—
<blockquote>
(1) at any unusual time or place or a time or place known or which should
be known to be inconvenient to the consumer. In the absence of knowledge
of circumstances to the contrary, a debt collector shall assume that the
convenient time for communicating with a consumer is after 8 o'clock antemeridian
and before 9 o'clock postmeridian, local time at the consumer's location;

(2) if the debt collector knows the consumer is represented by an attorney
with respect to such debt and has knowledge of, or can readily ascertain,
such attorney's name and address, unless the attorney fails to respond within
a reasonable period of time to a communication from the debt collector or
unless the attorney consents to direct communication with the consumer;
or 
(3) at the consumer's place of employment if the debt collector knows or
has reason to know that the consumer's employer prohibits the consumer from
receiving such communication. 
</blockquote>
15 U.S.C.A. §1692c(a) (West 2006). In turn, §1692d provides: A
debt collector may not engage in any conduct the natural consequence of which
is to harass, oppress or abuse any person in connection with the collection
of a debt. Without limiting the general application of the foregoing, the
following conduct is a violation of this section: 
<blockquote>
(1) The use or threat of use of violence or other criminal means to harm
the physical person, reputation or property of any person. 
(2) The use of obscene or profane language or language the natural consequence
of which is to abuse the hearer or reader.

(3) The publication of a list of consumers who allegedly refuse to pay debts,
except to a consumer reporting agency or to persons meeting the requirements
of §1681a(f) or 1681b(3) of this title. 
(4) The advertisement for sale of any debt to coerce payment of the debt.
 
(5) Causing a telephone to ring or engaging any person in telephone conversation
repeatedly or continuously with intent to annoy, abuse or harass any person
at the called number. 
(6) Except as provided in §1692b of this title, the placement of telephone
calls without meaningful disclosure of the caller's identity. 
</blockquote>
15 U.S.C.A. §1692d (West 2006). Moreover, §1692f provides: A debt
collector may not use unfair or unconscionable means to collect or attempt
to collect any debt. Without limiting the general application of the foregoing,
the following conduct is a violation of this section:

<blockquote>
(1) The collection of any amount (including any interest, fee, charge or
expense incidental to the principal obligation) unless such amount is expressly
authorized by the agreement creating the debt or permitted by law. 
(2) The acceptance by a debt collector from any person of a check or other
payment instrument postdated by more than five days unless such person is
notified in writing of the debt collector's intent to deposit such check
or instrument not more than 10 nor less than three business days prior to
such deposit. 
(3) The solicitation by a debt collector of any postdated check or other
postdated payment instrument for the purpose of threatening or instituting
criminal prosecution. 
(4) Depositing or threatening to deposit any postdated check or other postdated
payment instrument prior to the date on such check or instrument. 
(5) Causing charges to be made to any person for communications by concealment
of the true purpose of the communication. Such charges include, but are
not limited to, collect telephone calls and telegram fees. 
(6) Taking or threatening to take any nonjudicial action to effect dispossession
or disablement of property if—

<blockquote>
(A) there is no present right to possession of the property claimed as
collateral through an enforceable security interest; 
(B) there is no present intention to take possession of the property;
or 
(C) the property is exempt by law from such dispossession or disablement.

</blockquote>
</blockquote>
(7) Communicating with a consumer regarding a debt by post card.

(8) Using any language or symbol, other than the debt collector's address,
on any envelope when communicating with a consumer by use of the mails or
by telegram, except that a debt collector may use his business name if such
name does not indicate that he is in the debt collection business. 15 U.S.C.A.
§1692f (West 2006). 
</blockquote>
37 15 U.S.C.A. §1692e (West 2006). 
38 See 15 U.S.C.A. §1692e(2) and (5) (West 2006). 
39 Cavallaro v. Law Office of Shapiro & Kreisman, 933 F. Supp. 1148,
1153 (E.D.N.Y. 1996) (citation omitted).

40 Patzka v. Viterbo Coll., 917 F. Supp. 654, 658 (W.D. Wis. 1996) (citation
omitted). 
41 Cavallaro, 933 F. Supp. at 1153 (citation omitted). 
42 Id. (citing Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir.
1993). See also Beattie v. D.M. Collections Inc., 754 F. Supp. 383, 392
(D. Del. 1991) ("in determining whether a statement is false, deceptive
or misleading so as to constitute a violation of any of the provisions of 15
U.S.C.A. §1692e, the court should apply the standard of the 'least sophisticated
consumer'") (citations omitted). 
43 Beattie, 754 F. Supp. at 392.

44 Clomon, 988 F.2d at 1320 (2d Cir. 1993). 
45 Beattie, 754 F. Supp. at 392. 
46 Patzka, 917 F. Supp. at 658-59. Section 1692k(c) provides as follows:
"A debt collector may not be held liable in any action brought under this
subchapter if the debt collector shows by a preponderance of evidence that the
violation was not intentional and resulted from a bona fide error notwithstanding
the maintenance of procedures reasonably adapted to avoid any such error."
15 U.S.C.A. §1692k(c) (West 2006). 
47 See 15 U.S.C.A. §1692k(a) (West 2006).

48 276 F.3d at 505. 
49 Id. Walls exercised the ability to "ride through" her obligations
with Wells Fargo Bank. 
50 Id. 
51 Id. 
52 Id. Walls also sought a legal determination that §524 creates
a private right of action independent of any contempt proceeding brought under
§105 in bankruptcy court. Simply put, the Ninth Circuit Court of Appeals
concluded that no such private right of action exists.

53 Id. at 510. 
54 Id. 
55 Id. (citations omitted). 
56 Id. 
57 368 F.3d at 728.

58 Id. 
59 Id. 
60 Id. 
61 Id. 
62 Id.

63 Id. Alexander also claimed that Unlimited Progress violated the FDCPA
by communicating directly with her, even though she was represented by counsel.

64 The matter was decided prior to the effective date of the 2005 amendments
to the Bankruptcy Code. 
65 368 F.3d at 729. 
66 Id. at 730. 
67 Id. 
68 Id.

69 Id. 
70 Id. at 731. 
71 Subject, of course, to a defense of laches. 
72 See 368 F.3d at 730. 
73 Id.

74 Id. 
75 Id. at 732-33.

Journal Authors

Michael D. Sousa

Journal Date

Sunday, October 1, 2006 - 12:00