Examining Subjective, Unreasonable Good Faith and the Discharge Injunction

The U.S. Supreme Court has long recognized that one of the fundamental purposes of bankruptcy is to release honest debtors from oppressive debts.¹ Section 524 of the Bankruptcy Code provides for a discharge, designed to “ensure that debtors receive a ‘fresh start’ and are not unfairly coerced into repaying discharged prepetition debts,”² and to “eliminate any doubt concerning the effect of the discharge as a total prohibition on debt-collection efforts.”³

Bankruptcy courts are empowered to safeguard this fresh start and deter creditor misconduct by invoking their civil contempt powers under § 105. Under § 105, bankruptcy courts may “issue any order, process, or judgment that is necessary or appropriate to carry out”⁴ Code provisions. However, contempt may often be the only remedy for a discharge injunction.

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