6th Circuit BAP Holds Creditors Have a Duty to Act to Stop Civil Contempt Proceedings

6th Circuit BAP Holds Creditors Have a Duty to Act to Stop Civil Contempt Proceedings

On March 4, 2019 the Bankruptcy Appellate Panel of the 6th Circuit Court of Appeals ruled on multiple issues important to debtors.

  • Can an action against a creditor for a stay violation be brought in a subsequent bankruptcy or does it have to be brought in the original case?
  • Does the Rooker-Feldman doctrine divest jurisdiction from the bankruptcy court when a state court judgment is entered while the bankruptcy is pending?
  • Does the automatic stay prohibit collection of a property settlement stemming from a divorce decree?
  • Is the continuation of a contempt proceeding against a debtor a violation of the automatic stay when the contempt was found pre-petition, but the “sentencing hearing” at which the court ordered the debtor jailed for failure to pay a property settlement was post-petition, and the only condition to purge the contempt was to pay the property settlement?
  • Does a creditor and her legal counsel violate the automatic stay when they take no action to stop a state court from proceeding with a contempt hearing, the stated purpose of which is to confine the debtor to jail for failure to pay a dischargeable property settlement, and in failing to act to prevent the state court from sentencing the debtor to jail under such circumstances?

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1 Comment

  1. Lee Kravitz

    Counsel for the debtor did an outstanding job representing her client. Hopefully the damages for her client’s incarceration in violation of the sty will be in the 10s of thousands.

    Reply

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