U.S. SUPREME COURT CREATES NEW STANDARD FOR DISCHARGE CONTEMPT SANCTIONS

Recently, the United States Supreme Court redefined the standard to which a creditor can be held responsible for a violating a bankruptcy discharge order. The Court’s decision in Taggart v. Lorenzen rejected the U.S. Court of Appeals for the Ninth Circuit’s “good-faith” subjective standard—an unpopular standard for many—and created a new “fair ground of doubt” standard. Under the new standard, if objectively there is fair ground of doubt as to whether the discharge order applies, creditors cannot be held in contempt of a discharge order. Nicole Strickler of Messer Strickler, with colleague June Coleman, submitted an amicus brief on behalf of the National Creditors Bar Association.  

            Bloomberg Law wrote about this decision in a June 3rd article, “Supreme Court Clarifies When Creditors Can Collect in Bankruptcy”, and sought commentary from Nicole Strickler on the ruling. Ms. Strickler was quoted in saying, “the Supreme Court’s new standard is good news for creditors because it recognizes that reasonable minds may differ, and in such cases, creditors shouldn’t be punished.” Ultimately, those in the credit and collection industry should be pleased with the Supreme Court’s standard.