In re Sanchez, 545 B.R. 55

Debtors filed Chapter 7; NCSWA was listed as an unsecured creditor for unpaid trash fees and received notice of the bankruptcy and discharge (entered Sept. 8, 2015).
NCSWA is a joint governmental entity that provides curbside trash pickup (a utility service) under a Joint Powers Agreement; Debtors paid a $150 deposit and were charged about $18/month prepetition.
On or about Nov. 25, 2015, after discharge, NCSWA removed Debtors’ trash bin, discontinued service, and later returned a $150 check while directing Debtors to reapply and post a new deposit.
NCSWA’s manager threatened to place a lien and required Debtors to sign a post-discharge agreement (reaffirmation) to pay discharged prepetition debt; service was not restored.
Debtors filed a motion to sanction NCSWA for violating the discharge injunction; NCSWA did not respond or appear. Debtors sought damages and incurred $3,800 in attorney fees.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether NCSWA’s post-discharge discontinuation of service and demands violated § 524(a)(2) discharge injunction	NCSWA discontinued service, removed the trash bin, threatened a lien, and coerced a reaffirmation to collect discharged debt	(No responsive filing; potentially argued later that returned payment/new application cured problem)	Court held NCSWA willfully violated § 524(a)(2) because its conduct objectively coerced payment of discharged debt
Whether a governmental utility may discontinue service post-discharge	Debtors: monopoly utility may not cut off sole-source service to coerce payment of discharged prepetition debt	NCSWA: (no timely argument; post-motion acts arguably aimed at restoring service without collecting discharged debt)	Court applied § 524(a)(2) objective coercion standard and found violation despite ambiguity in later conduct
Appropriate sanctions and damages for violating the discharge injunction	Debtors sought actual damages, attorney fees, and punitive damages	NCSWA did not contest sanctions	Court awarded $150 actual damages (value of bin) and $3,800 attorney fees; reserved additional damages if violations continue

Paul v. Monts, 534 F.3d 1303 (10th Cir. 2008) (bankruptcy courts may sanction violations of § 524 under equitable powers of § 105 and apply objective coercion test)
Bessette v. Avco Fin. Servs., 280 F.3d 439 (1st Cir. 2002) (sanctions are recognized remedy for discharge injunction violations)
Hardy v. United States (In re Hardy), 97 F.3d 1384 (11th Cir. 1996) (awarding damages for willful violation of discharge injunction)
In re Culley, 347 B.R. 115 (10th Cir. BAP 2006) (upholding award of actual damages, attorney fees, and punitive damages for § 524 violation)
In re Otero, 498 B.R. 313 (Bankr. D.N.M. 2013) (discussing lack of private right under § 524 and awarding sanctions under § 105)
In re Martinez, 504 B.R. 722 (Bankr. D.P.R. 2014) (discussing § 366 protections for utility services)