Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller

Exercise 10

Discharge. Monica Sexton filed a petition for Chapter 13 reorganization. One of her creditors was Friedman's Jewelers. Her petition misclassified Friedman's claim as $800 of unsecured debt. Within days, Friedman's filed proof of a secured claim for $300 and an unsecured claim for $462. Eventually, Friedman's was sent payments of about $300 by check. None of the checks were cashed. By then, Friedman's had filed its own petition under Chapter 11, Bankruptcy Receivables Management (BRM) had bought Friedman's unpaid accounts, and the checks had not been forwarded. Sexton received a discharge on the completion of her plan. BRM was not notified. BRM wrote to Sexton's attorney to ask about the status of her case, but received no response. BRM demanded that Sexton surrender the collateral on its claim. Sexton asked the court to impose sanctions on BRM for violating the discharge order. Was Sexton's debt to Friedman's dischargeable? Should BRM be sanctioned? Discuss. [ In re Sexton, __ Bankr. __ (E.D.N.C. 2011)] (See Chapter 7-Liquidation.)