PHH Mortgage to Face State Claims Over Seeking Discharged Debt

PHH Mortgage Corp. must face a debtor’s allegation that it violated state law when it improperly tried to collect a debt that had already been discharged in bankruptcy, the Fourth Circuit said Friday.

Mark Guthrie’s state claims are consistent with him getting a fresh start financially and therefore aren’t preempted by the Bankruptcy Code, the opinion by Judge A. Marvin Quattlebaum Jr. said, addressing a question of first impression in the federal circuits.

Guthrie and his ex-wife obtained a mortgage on a house from PHH. After they got divorced, Guthrie filed for bankruptcy, but his ex-wife didn’t and her name ...