Jordan 2008 WL 917117 (4th Cir.(Va.))

Discharge - Debtor did not "willfully" violate court order by refinancing home, as would have warranted revocation of her discharge.

A Chapter 7 trustee seeking revocation of a debtor's discharge under 11 U.S.C.A. 727(a)(6)(A) and (d)(3) for the debtor's "refusal" to obey a lawful court order must establish that the debtor willfully and intentionally refused to obey the court's order, the Fourth Circuit Court of Appeals has held, noting a split of authority and following the majority view. Moreover, in the case at bar, the Chapter 7 debtor did not "willfully" refuse to obey the court's administrative order when she refinanced her home without the court's or the trustee's knowledge or consent. In addition to requiring that she cooperate with the trustee, the order in question prohibited the debtor's "selling, transferring, removing, destroying, mutilating or concealing" of property. The order did not specifically prohibit the "refinancing" of property and, the Court of Appeals reasoned, it would not have been apparent to the typical debtor that refinancing property may technically involve a transfer in connection with the execution of a deed of trust. The burden to clarify any restriction on refinancing rested not on a layperson such as the debtor, but on the business-savvy drafters of the administrative order. One judge concurred in part and dissented in part, agreeing that the bankruptcy court had applied the correct legal standard, but concluding that the undisputed facts established that this debtor willfully violated the bankruptcy court's order when she refinanced her home.