In
re Paglia (Bankr. WD Pa. 2003)
Bankruptcy Law
Facts:
Debtor took out a note for his business for $13k for bank. Debtor’s
mother pledged her interest in an annuity to secure payment of
debtor’s obligation. Debtor filed for Chapter 7. Bank sent a
demand to the mother for payment. Before discharge the debtor took
out another note for $13k payable in 108 monthly installments. Mom
once again pledged her interest. Debtor received a discharge and
paid off the second note. 10 years after the second note was signed
the debtor brought an action against the bank for violating the
discharge injunction and the automatic stay when it coerced him to
execute the 2nd
note.
Analysis:
A creditor that passively permits a debtor to become liable once
again for a discharged debt has not violated §524(a)(2). The ∆ in
no way undertook to collect a soon-to-be discharged debt from debtor
or even advised him that he had to execute the second note. In fact
the debtor took his initiative to ensure the ∆ would not take legal
action on his mother. The ∆ merely accepted debtor’s offer to
execute the second note. The second note was not a reaffirmation
however. It was a different obligation for different consideration.
*Chapter 13 contains a special stay to protect co-debtors while
Chapter 7 does not.
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