476 B.R. 344
1st Cir. BAP2012Background
- Hann filed Chapter 13 in 2004; ECMC claimed about $55,000 on Hann’s student loans (Stafford Notes).
- ECMC filed a proof of claim in 2005 based on unpaid student loans; claim included three $7,500 Stafford Notes.
- Hann objected to the claim in November 2005; hearing held January 10, 2006; Hann testified about payment history.
- The court sustained Hann’s objection and entered the June 2006 Order allowing ECMC’s claim at $0.00.
- Hann received a Chapter 13 discharge on March 2, 2010, with student loans generally excepted from discharge.
- ECMC repeatedly sought to collect after discharge, leading Hann to reopen the case and sue ECMC in 2011 for injunctive relief, declaratory relief, contempt, and damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the June 2006 Order precludes post-discharge collection | Hann: collateral estoppel binds ECMC to $0.00 | ECMC: disallowance does not bar post-discharge collection | Yes; the June 2006 Order effectively precludes further collection |
| Whether disallowance of a claim equals discharge of the underlying nondischargeable debt | Hann: disallowance creates finality and no debt remains | ECMC: disallowance does not extinguish the nondischargeable debt | Disallowance can preclude a claim; no debt exists post-disallowance when fully paid |
| Whether sanctions under § 105 were proper for ECMC’s conduct after discharge | Hann: ECMC violated discharge injunction and court orders | ECMC: no contempt finding or hearing existed | Sanctions affirmed; ECMC’s post-discharge collection conduct warranted fees |
Key Cases Cited
- In re Cruz, 277 B.R. 793 (Bankr.M.D. Ga. 2000) (disallowance not discharge of debtor’s liability)
- In re Bell, 236 B.R. 426 (N.D. Ala. 1999) (disallowance does not bar ECMC from collecting beyond plan payments)
- In re Diaz, 647 F.3d 1073 (11th Cir. 2011) (disallowance vs. dischargeability distinction; nondischargeable debts post-discharge)
- In re Fort, 412 B.R. 840 (Bankr.W.D. Va. 2009) (disallowance does not automatically discharge debt post‑discharge)
- In re Goldberg, 297 B.R. 465 (Bankr.W.D.N.C. 2003) (validity/amount of claim; disallowance affects existence of debt)