Williams v. Meyer (In Re Williams), 438 B.R. 679

Williams received a Chapter 7 discharge in 1997, with the discharge covering debts incurred before March 21, 1995, including the Promissory Note to Meyer.
In 1998 the Meyers filed a criminal complaint against Williams for securities fraud and later pursued a restitution order as part of Williams's sentence.
A 2001 state criminal trial resulted in Williams’s conviction for securities fraud; restitution totaling over $83,000 was imposed, including the $6,000 loan referenced in the Promissory Note.
Williams contends the restitution obligation arises from a prepetition crime and thus is discharged, and seeks to void the restitution order and assert a discharge violation.
The bankruptcy court dismissed Williams’s complaint for failure to state a claim, concluding the discharge injunction does not apply to post-discharge restitution in this context.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether criminal restitution is non-dischargeable under § 523(a)(7).	Williams argues restitution to Meyers violates discharge.	Meyers contend restitution is non-dischargeable under § 523(a)(7).	Discretionary restitution is non-dischargeable under § 523(a)(7).
Whether the post-discharge restitution order violates § 524(a)(1) or § 524(a)(2).	Discharge injunction prohibits collecting discharged debts; restitution results are actionable.	Restitution arises from prepetition crime and is excepted from discharge under § 523(a)(7).	No violation; restitution is excepted from discharge as § 523(a)(7) applies.
Whether the Meyers’ reporting of the crime constitutes willful contempt of the discharge injunction.	Conduct constitutes an improper enforcement of a discharged debt.	Conviction proves crime occurred; reporting was not willful contempt.	Reporting conduct did not constitute willful contempt under these facts.
Whether public policy favors allowing reporting of crimes despite discharge.	Creditors may be incentivized to report crimes to protect victims.	State has prerogative to enforce criminal sanctions; discharge should not shield crimes.	Public policy does not bar legitimate criminal reporting; conviction controls.

Kelly v. Robinson, 479 U.S. 36 (1986) (restitution generally non-dischargeable under § 523(a)(7))
In re Troff, 488 F.3d 1237 (10th Cir. 2007) (restitution to crime victims non-dischargeable under § 523(a)(7))
Paul v. Iglehart (In re Paul), 534 F.3d 1303 (10th Cir. 2008) (objective standard for discharge violation; coercive effect inquiry)
United States v. Pepper, 51 F.3d 469 (5th Cir. 1995) (bankruptcy discharge does not bar criminal restitution in criminal case)
United States v. Carson, 669 F.2d 216 (5th Cir. 1982) (restitution as a penalty serves rehabilitation; losses not discharged)
Pennsylvania Dept. of Public Welfare v. Davenport, 495 U.S. 552 (1990) (restitution as a liability on a claim; chapter 13 discharge context)
O'Malley v. Rarer (In re O'Malley), 90 B.R. 417 (Bankr. D. Minn. 1988) (restitution prepetition crime treated as dischargeable in Chapter 13 contexts)