Bankruptcy Discharge Injunction: Contempt Motions and Remedies

Collection activity on a debt your bankruptcy wiped out is a violation of the discharge injunction under 11 U.S.C. § 524, and bankruptcy discharge injunction violations are enforced by filing a civil contempt motion in the bankruptcy court that issued your discharge order.¹ The court can order compensatory damages, attorney fees, corrective action, and in serious cases punitive damages. Enforcement is on you, though. The court does not police compliance on its own.

What Counts as a Violation

Any communication or action designed to pressure you into paying a discharged debt as your personal obligation crosses the line. The obvious examples are collection calls, demand letters, invoices, and new lawsuits. The less obvious ones trip up more creditors:

Continuing a pre-bankruptcy state court case rather than dismissing it after discharge.
Reporting a discharged debt to the credit bureaus as active, delinquent, or carrying a balance.
A bank taking money from your checking or savings account to cover a discharged credit card it also issued. Section 524(a)(2) specifically bars these offsets.¹
Verbal threats of wage garnishment or property seizure on a debt that no longer exists.
Refusing services, withholding transcripts, or conditioning access on repayment of a discharged balance.

Even one letter can be enough if it demands payment or implies consequences for nonpayment. Some creditors try softer language like “for informational purposes only” while including a payment coupon. Courts have seen that approach before and have not been impressed.

Debts and People the Injunction Does Not Cover

Before you file anything, make sure the debt was actually discharged and the collection is actually aimed at you. A creditor pursuing a debt that was never covered by the injunction is not breaking any rules, even if the contact feels like harassment.

Several categories of debt survive bankruptcy under 11 U.S.C. § 523 and remain fully collectible: domestic support obligations, recent income taxes and tax debts tied to fraud or unfiled returns, government-backed and qualified private student loans (absent an undue hardship ruling), debts obtained through fraud or false financial statements, debts for willful and malicious injury, and debts you failed to list if the creditor lacked notice of your case.²

The injunction also leaves several things in place:

Liens on property. A mortgage or auto lender can still repossess or foreclose if payments stop. What they cannot do is sue you personally for a deficiency.
Co-signer liability. Section 524(e) makes clear that discharging your debt has no effect on anyone else who co-signed or guaranteed it. A creditor contacting a co-signer is not violating your injunction.¹
Reaffirmed debts. If you signed a reaffirmation agreement that met the statute’s requirements, the injunction does not apply to that debt, and the creditor keeps full collection rights.
Voluntary payments. Section 524(f) preserves your right to voluntarily pay any discharged debt. A creditor can accept a payment you offer. What it cannot do is pressure you, directly or by implication, into making one.¹

The Standard the Court Will Apply

Not every technical violation produces a contempt finding. In 2019 the Supreme Court set the governing test in Taggart v. Lorenzen: a court may hold a creditor in civil contempt only “if there is no fair ground of doubt as to whether the order barred the creditor’s conduct.”³ In plain terms, the creditor needs an objectively reasonable basis for believing its actions were lawful.

The Court rejected both extremes. Strict liability based on mere knowledge of the discharge was too harsh, and a subjective good-faith test, where sincere belief would be enough, was too lenient. The middle standard matters most when the dischargeable-versus-nondischargeable line is genuinely ambiguous. A creditor with a plausible fraud argument under § 523 may escape contempt. A creditor sending collection letters on an ordinary discharged credit card balance has no reasonable basis and will not.³

Running your situation through this test before you file is worth the time. If your case sits squarely on the clear side of the line, you have real leverage. If the creditor has a colorable argument the debt was excepted from discharge, expect a harder fight.

Documenting the Violation

Evidence quality is what separates a contempt motion the judge grants from one the judge dismisses. Start a file the moment the first contact happens.

Keep a communication log with the date, time, method, and name or department of whoever reached out. A single missed voicemail from a collection agency is worth logging.
Save every letter, email, text, and voicemail. Keep envelopes too. Postmarks establish dates.
Pull your reports from all three credit bureaus. Screenshot or print any discharged account that still shows an active balance, delinquent status, or any notation implying you still owe.
If a creditor offset funds from your account, the bank statement is direct proof of the amount and date.
Keep your discharge order within easy reach. The motion will reference it, and it fixes the date after which collection activity became unlawful.

A pattern of repeated contact strengthens your case, but one clear, well-documented violation is enough to file. Courts need specificity. “They kept calling me” will not carry the day; exact dates, identified parties, and the content of each contact will.

Filing the Contempt Motion

Enforcement runs through the bankruptcy court that issued your discharge. There is no separate lawsuit and no private damages action under § 524. You file the motion in your original case as a contested matter.

If your case has already closed, which is usually true by the time a creditor misbehaves, you first file a motion to reopen. The filing fee is $245 for a Chapter 7 case and $235 for a Chapter 13 case.⁴ Some judges will waive or defer the fee when the sole purpose of reopening is to enforce the discharge injunction. If the fee is a hardship, ask.

Your motion should include the original case number, the date of the discharge order, the identity of the violating creditor, and a detailed timeline of each prohibited contact or action with the documentary support attached.

Serve the creditor after filing. Under Federal Rule of Bankruptcy Procedure 7004, service on most parties, corporations included, can be made by first-class mail. For a company, the envelope is addressed to the company and directed to an officer, managing agent, or authorized agent by title; you do not need to name the individual.⁵ Insured depository institutions are the exception: service on a bank requires certified mail addressed to an officer.

Once the motion and proof of service are on file, courts typically set a hearing within 30 to 60 days. The creditor may try to settle beforehand or file a written response. At the hearing, the judge measures the conduct against the discharge order and asks whether the creditor had any objectively reasonable basis for its actions under Taggart.

What the Court Can Order

When a judge finds a creditor in civil contempt, the relief available covers both your losses and the creditor’s conduct.

Compensatory damages cover actual financial losses caused by the violation: lost wages from time spent dealing with the creditor, travel to court, fees to pull credit reports, and similar out-of-pocket expenses. The goal is to put you back where you would have been if the creditor had followed the law.

Emotional distress damages are a less settled area. Some courts have awarded them by analogy to automatic stay cases, requiring significant harm and a clear causal link. At least one court has held that after Taggart clarified the civil contempt framework, compensatory damages here should be limited to financial losses. If emotional distress is central to your claim, expect the creditor to push back.

Attorney fees and costs. Courts routinely shift reasonable fees and litigation costs to the violating creditor. Without that, most debtors could not afford to enforce the injunction, and many bankruptcy attorneys take these cases knowing fees are recoverable on a win.

Punitive damages. When conduct is egregious or part of a pattern of defiance, the court can add punitive damages on top of compensatory relief.³ They are most likely when a creditor pressed on after being warned, or when a large institutional creditor has a documented history of similar violations.

Corrective orders. The court can direct the creditor to update credit bureau reporting to reflect the discharge, dismiss pending state court collection suits, reverse unauthorized offsets, and stop all further contact. Ignoring one of these orders carries its own contempt exposure.

Taxes on Any Recovery

One detail that catches people off guard: damages from a discharge violation are generally taxable income. Under IRC § 104(a)(2), only damages received on account of personal physical injuries or physical sickness are excluded from gross income.⁶ Compensatory damages for economic losses, punitive damages, and emotional distress awards all fall outside that exclusion.

The IRS looks at what the payment is meant to replace. If a settlement agreement does not specify the character of the payment, the IRS examines the underlying claim to determine taxability.⁷ If you win or settle a significant discharge violation case, set aside part of the recovery for taxes. The bankruptcy cleared your old debts; an unexpected tax bill from the enforcement case can create a new one.

1
Office of the Law Revision Counsel. 11 USC 524 – Effect of Discharge
2
Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
3
Supreme Court of the United States. Taggart v. Lorenzen
4
United States Courts. Bankruptcy Court Miscellaneous Fee Schedule
5
Legal Information Institute. Rule 7004 – Process; Issuing and Serving a Summons and Complaint
6
Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness
7
Internal Revenue Service. Tax Implications of Settlements and Judgments