## Facts

- Chapter 7 debtors owned a home subject to a residential mortgage held/serviced by the creditor.
- The debtors filed a statement of intention indicating they intended to keep the home and continue making mortgage payments.
- After the bankruptcy filing, the creditor made extensive communications to the debtors concerning the mortgage, totaling about 90 contacts post-petition.
- Many communications, by their volume and content, sought payment or reaffirmation of the debt as a personal obligation rather than limited lien-administration coordination.
- The debtors received a discharge; the creditor continued contacting them after discharge regarding the mortgage.
- The debtors filed an adversary proceeding alleging violations of the automatic stay and the discharge injunction; the bankruptcy issues were referred to the bankruptcy court, which resolved liability after summary judgment proceedings and trial on remaining fact issues.
- The discharge order included additional explanatory language beyond the statutory discharge provisions.

## Issues

1. Whether the creditor’s post-petition communications constituted acts to collect a prepetition claim against the debtors in violation of the automatic stay under 11 U.S.C. § 362.
2. Whether the creditor’s post-discharge communications constituted acts to collect a discharged debt as the debtors’ personal liability in violation of the discharge injunction under 11 U.S.C. § 524(a)(2).
3. What scope of communications, if any, a secured mortgage creditor may direct to chapter 7 debtors who intend to retain the collateral and continue payments.

## Decision

- The court held the creditor violated the automatic stay by engaging in repeated post-petition collection activity directed at the debtors personally; few of the roughly 90 contacts were proper.
- The court held the creditor violated the discharge injunction because its post-discharge communications, viewed in context, were acts to collect the debt as a personal liability rather than limited action consistent with in rem rights.
- The court recognized that limited written contact may be reasonable when debtors intend to keep the home, including communication to determine how the debtors intend to make mortgage payments.
- The court determined that non-statutory explanatory language in the discharge order was unnecessary because the discharge and injunction are defined by statute.
- The court awarded relief, including damages and sanctions, for the stay and discharge-injunction violations.

## Legal Principles

- The automatic stay bars acts to collect, assess, or recover a prepetition claim against the debtor during the bankruptcy case.  
- The discharge injunction under 11 U.S.C. § 524(a)(2) prohibits acts to collect a discharged debt as a personal liability of the debtor, while leaving a secured creditor’s in rem rights in the collateral intact.
- Whether communications violate § 362 or § 524(a)(2) depends on their substance, context, and cumulative effect; “informational” communications may be unlawful if they function as personal collection pressure.
- When a debtor intends to retain secured collateral and keep paying, a secured creditor may make limited, reasonable written inquiries needed to determine payment arrangements, but may not seek reaffirmation or otherwise pursue personal liability.
- The scope and effect of discharge are governed by statute; discharge orders should not be treated as altering or partially restating the statutory injunction.

## Conclusion

The court found that a mortgage creditor’s extensive post-petition and post-discharge contacts crossed the line from permissible lien-related communication into prohibited personal debt collection, violating both the automatic stay and the discharge injunction, while allowing only narrow written contact necessary to arrange ongoing payments on the retained collateral.


In re Henry, 266 B.R. 457 (Bankr. C.D. Cal. 2001)