10-32042 In re Snyder

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Bankruptcy
Sanctions

Where an attorney filed a bankruptcy petition, knowing the client was not eligible for discharge, for the sole purpose of delaying a garnishment creditor, a $500 sanction is appropriate.

“She freely admitted she had filed the case solely to thwart the creditor’s legal action, and she knew the debtor did not qualify for a discharge. Obtaining a discharge is the only valid purpose I am aware of for filing a chapter 7 case for a consumer. There may be a valid purpose in filing a chapter 13 case when the debtor does not qualify for a discharge, usually because the time of filing is too soon after a prior discharge.

However, in that instance a debtor might not run afoul of bankruptcy policy of saving a home or other secured property or making payments to creditors to the extent of the debtor’s ability. This is a valid use of the bankruptcy system. The attorney’s instigation and participation in this case uses the power of the federal court to improperly avoid creditor action when the debtor had no legal right to do so. This may be what the client wanted, but the attorney is held to a higher standard within the legal system.”

“Based on the foregoing, a monetary sanction shall be imposed against debtor’s counsel in the amount of $500, payable to Clerk of Bankruptcy Court within 30 days.”

10-32042 In re Snyder

E.D.Wis., McGarity, Bankr. J.