In re Dickerson, 510 B.R. 289

Debtors Lome and Crystal Dickerson filed a Motion for Contempt on February 4, 2014 alleging Collection Bureau, Inc. violated the § 362(a) automatic stay and § 524(a) discharge injunction.
Collection had obtained a state court default judgment against Debtors in 2011 for eight debts and issued a wage garnishment in July 2011.
Debtors filed a chapter 7 petition on July 14, 2011, received a discharge on October 17, 2011, and the case closed October 19, 2011.
After discharge, Collection obtained multiple garnishments post-discharge to collect on the judgment, including writs in November 2011, December 2011, and 2012; Debtors had paid most fines directly to the County.
The court held the first post-discharge garnishment violated the discharge injunction and, because the remaining garnishments sought non-dischargeable amounts, concluded Collection’s actions were contemptuous and awarded damages and attorney fees.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether post-discharge garnishments violated the discharge injunction	Dickersons: debts discharged; garnishments unlawful	Collection: some amounts may be excepted as §523(a)(7) fines	Yes; first writ violated discharge; later writs were not validly excepted
Whether the §523(a)(7) exception applies to the disputed debts	Fines were discharged; not payable to govt; not excluded	Fines payable to governmental unit and not compensable loss	Not applicable; debts were not payable to/for govt nor non-pecuniary losses; thus not excepted
Whether Collection acted willfully and knowingly and whether sanctions are warranted	Collection knew the injunction applied and intended to collect discharged debts	Collection acted under erroneous belief based on advice	Yes; willful violation established; sanctions awarded
Whether Idaho §19-4708 surcharges affect dischargeability	Surcharges justified under state law and not dischargeable	Statute does not render a nongovernmental collector a government unit and surcharges not dischargeable	No; statute does not create dischargeable exception

Kelly v. Robinson, 479 U.S. 36 (1987) (§523(a)(7) requires fines be payable to and for governmental unit and not compensation for pecuniary loss)
In re Zilog, Inc., 450 F.3d 996 (9th Cir. 2006) (willful discharge-injunction violation can support contempt; requires knowledge and intent)
In re Nash, 464 B.R. 874 (9th Cir. BAP 2012) (clear and convincing standard; debtor may recover damages and fees for contempt)
In re Dyer, 344 F.3d 1174 (9th Cir. 2003) (willfulness and tailored sanctions standards for contempt)
Stevens v. Comm. Collection Serv., Inc. (In re Stevens), 184 B.R. 584 (Bankr. W.D. Wash. 1995) (assignment to collection agency not automatically exempt from discharge under §523(a)(7))
Searcy v. Ada Cnty. Prosecuting Attorney’s Office (In re Searcy), 463 B.R. 888 (9th Cir. BAP 2012) (discharge issues guided by federal law; state-law factors may inform but not govern dischargeability)
Bullock v. BankChampaign, N.A., 569 U.S. 347 (2013) (statutory interpretation of discharge exceptions; narrow reading favored)
In re Huh, 506 B.R. 257 (9th Cir. BAP 2014) (strictly construed discharge exceptions in favor of debtors)