(L to R) Rudolph J. DiMassa Jr. and Geoffrey A. Heaton Duane Morris (Photo: Courtesy Photo) (L to R) Rudolph J. DiMassa Jr. and Geoffrey A. Heaton Duane Morris (Photo: Courtesy Photo)

In a recently published decision, the U.S. Bankruptcy Court for the Eastern District of North Carolina held that a creditor violated both the automatic stay and discharge injunction when the creditor made a criminal referral against a debtor on account of a bounced rent check. The creditor contended that its actions fell within an exception to the automatic stay for the "commencement or continuation of a criminal action or proceeding" against a debtor. The court, however, rejected this contention, concluding that the creditor's "primary purpose" in commencing the criminal proceeding was to recover a debt. See, In re Kimbler, 624 B.R. 774 (Bankr. E.D.N.C. 2020).

Background

On Jan. 1, 2019, Lori Jayne Kimbler leased from Robert L. Hill and Bob Hill Enterprises, Inc. certain real property in Havelock, North Carolina, where Kimbler operated an antiques store. On May 8, 2019, Kimbler wrote a check to Hill for rent in the amount of $577.50. Approximately five days later, the check was returned to Hill because it was drawn on an account with insufficient funds.