Taggart v. Lorenzon, 587 U.S. ____ (2019)
A primary benefit of seeking relief under the U.S. Bankruptcy Code is the potential for a bankruptcy debtor to obtain a discharge. A discharge is a federal bankruptcy court order that releases the debtor from liability for most pre-bankruptcy debts. The discharge injunction bars creditors from collecting or attempting to collect on any debt covered by a debt covered by the discharge order.
The U.S. Supreme Court in a 2019 case, Taggart v. Lorenzon, 587 U.S. ____ (2019) discussed the ability of a banrkutpcy court to hold a prepetition creditor in contempt, though concluded thgat “civil contempt [of a discharge order] may be appropriate if there is no objectively reasonable basis for concluding that the creditor’s conduct might be unlawful.”
One complicating factor is that the discharge order a debtor receives is generally general and often refers to the relevant statutory section pertaining to a discharge in the relevant chapter of the Bankruptcy Code (i.e., chapter 7, 11, 12, or 13). It is therefore crucial to have an understanding of what debts are in fact discharged by the relevant statute referred to in the relevant chapter of the Bankruptcy Code. The complexity of the Bankruptcy Code and its interlocking statutes should encourage the prudent potential-debtor to seek competent counsel before considering filing for bankruptcy.
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