In re Pacheco
APPEAL
Unpublished
Discharged chapter 7 debtors asserted in the bankruptcy court that prepetition judgment creditors had violated the discharge injunction of 11 U.S.C. § 524(a), because their judgment remained on debtors' post-discharge credit report, and allegedly caused them to be refused credit. The bankruptcy court denied the claim and awarded attorney's fees to creditors, on the ground that debtors' claim had been filed in bad faith by their attorney. On debtors' motion for rehearing, the bankruptcy court again awarded fees to creditors. On appeal, the district court agreed with the bankruptcy court's denial of the claim and its award of fees in connection with the motion. However, the award of fees on rehearing was reversed, based on debtor's counsel's assertion that he had done more research on the issue and had found no law on either side. Noting that the research performed may not have been "brilliant," the district court held that, under the circumstances, sanctions could have a chilling effect on legitimate rehearing motions.