568 B.R. 118
9th Cir. BAP2017Background
- Debtors Robert and Finley Keller filed Chapter 13 in 2012; their confirmed plan provided for curing prepetition mortgage arrears and trustee payments of ongoing postpetition installments. Prepetition arrears were cured by March 31, 2015 and trustee continued postconfirmation payments.
- Shellpoint (loan servicer) reported the mortgage to the three major CRAs as 90–120+ days late and listed a past-due balance; it did not report the account as being part of a Chapter 13 plan.
- Debtors were denied credit for a vehicle purchase and moved for contempt and sanctions, alleging Shellpoint’s postpetition negative credit reporting violated the automatic stay (§ 362) and the confirmation order (§ 1327).
- Debtors framed the issue as whether reporting an account as "past due" or "late" during a pending Chapter 13 constitutes per se collection activity prohibited by § 362(a)(6), regardless of accuracy.
- Bankruptcy court denied the contempt motion; on appeal the BAP reviewed whether postpetition credit reporting of overdue/delinquent payments is a per se stay violation and whether reporting breached the confirmation order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether postpetition reporting of overdue/delinquent payments to CRAs is a per se violation of § 362(a)(6) | Reporting a debt as "past due" is classic collection activity intended to coerce payment and thus per se violates the automatic stay | Credit reporting serves legitimate credit‑granting purposes; negative reporting alone is not an act to collect absent evidence of intent to coerce or harass | Not a per se violation; postpetition negative reporting without more does not violate § 362(a)(6) |
| Whether reporting breached the confirmed Chapter 13 plan / confirmation order (§ 1327) | Plan term requiring trustee payments to be "applied" as if no arrearage existed obligates creditor to report the loan as current (no "past due" notation) | The confirmed plan is silent about credit reporting; "applied" governs payment application, not CRA reporting | No contempt: confirmation order did not specifically direct or prohibit CRA reporting, so no clear and convincing proof of violation |
Key Cases Cited
- Morgan Guaranty Trust Co. v. American Savings & Loan Ass'n, 804 F.2d 1487 (9th Cir. 1986) (mere requests for payment do not violate the stay absent coercion or harassment)
- Mahoney v. Washington Mutual, Inc. (In re Mahoney), 368 B.R. 579 (Bankr. W.D. Tex. 2007) (mere reporting of credit information is not an act to collect unless linked to intent to collect)
- Sommersdorf v. (In re Sommersdorf), 139 B.R. 700 (Bankr. S.D. Ohio 1991) (held negative reporting could violate stay/codebtor stay — discussed and disfavored by the Panel)
- Jones (In re Jones), 367 B.R. 564 (Bankr. E.D. Va. 2007) (reporting delinquent accounts is information sharing for credit decisions, not inherently collection activity)
- Kuehn v. Childs (In re Kuehn), 563 F.3d 289 (7th Cir. 2009) (discussing FCRA credit-reporting limits and interplay with bankruptcy discharge)