Attempt to Collect Rent from Tenant in Bankruptcy Violated Bankruptcy Code
Description District court held that a landlord was in contempt of the Bankruptcy Code by attempting to collect rent due, which violated the discharge of debt injunction and automatic stay of creditors that occurs in Chapter 7 bankruptcy.
Topic Bankruptcy
Key Words Discharge; Collection; Contempt
C A S E   S U M M A R Y
Facts Miller filed for Chapter 7 bankruptcy on July 14. A secured debt for a mortgage on her mobile home was listed. She also listed a debt to Chateau for rent on the lot where her mobile home sat. On October 25, the bankruptcy court entered an order of discharge. That day, Chateau asked her to pay $1,242.80 owed for lot rent from July to October. Miller claimed that debt was discharged. Chateau sued in state court and obtained a judgment on the claim on December 8. On December 20 the bankruptcy case was closed. Miller filed a contempt motion against Chateau, arguing that the collection effort violated the automatic stay and violated the discharge injunction. The bankruptcy court held for Miller and assessed $4,000 in costs and fees against Chateau. Chateau appealed.
Decision Affirmed. The discharge of a debt "operates as an injunction against the commencement of an action ... or an act, to collect [or] recover such debt as a personal liability of the debtor." Chateau argues that it could attempt to collect the rent owed between July 14 and October 25. That is incorrect. Miller's lease was in force before and during the bankruptcy proceedings, so it was under the bankruptcy order. "[Chateau's] attempt to collect rents owed violated the statutory discharge of Miller's debts."
Citation Chateau Communities, Inc. v. Miller, 252 B.R. 121 (E.D. Mich., 2000)

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