CITIZENS BANK OF MARYLAND V. DAVID STRUMPF
516 U.S. 16 (1995)
NATURE OF THE CASE: Bank (D) appealed a judgment, which held that the administrative hold on Strumpf's (P) checking account violated the automatic stay imposed by 11 U.S.C.S. 362(a)(7).
FACTS: P filed Chapter 13. P had a checking account with D. P was in default on a remaining balance of a loan of $5,068.75 from d. Under 362(a), the bankruptcy filing gave rise to an automatic stay of various types of activity by his creditors, including 'the setoff of any debt owing to the debtor that arose before the commencement of the [bankruptcy case] against any claim against the debtor.' 362(a)(7). Eight months later, D placed an 'administrative hold' on so much of P's account D claimed was subject to setoff. P then claimed the administrative hold violated the automatic stay established by 362(a). The Bankruptcy Court ruled the 'administrative hold' constituted a 'setoff' in violation of 362(a)(7) and sanctioned D. Several weeks later, the Bankruptcy Court granted D's motion for relief from the stay and authorized D to set off P's remaining checking account balance against the unpaid loan. But, P had reduced the checking account balance to zero, so there was nothing to set off. The District Court reversed concluding that the administrative hold was not a violation of 362(a). The Court of Appeals reversed. 'An administrative hold,' it said, 'is tantamount to the exercise of a right of setoff and thus violates the automatic stay of 362(a)(7).' The Supreme Court granted certiorari.
ISSUE:
RULE OF LAW:
HOLDING AND
DECISION:
LEGAL ANALYSIS:
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