By Michael L. Moskowitz and Michele K. Jaspan

We previously reported there is a split between the First and Ninth Circuits regarding the applicability of the good faith defense when a creditor violates the “discharge injunction.” In Lorenzen v. Taggart, the Ninth Circuit held that a creditor’s good faith belief that an action does not violate the discharge injunction precludes a finding against the creditor for contempt. Conversely, the First Circuit, in IRS v. Murphy, widened the split when it found the government employee who knew debtor received a discharge, could be held in contempt even though the government had a good faith belief the action did not violate the discharge injunction.