Imani Butler

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN RE IMANI BUTLER, 	) 	Chapter 7
)
Debtor. 	) 	Case No. 24-16719
)
) 	Honorable Deborah L. Thorne
MEMORANDUM OPINION
This matter comes on CNAC SH, Inc. (CNAC) and Kohn Law Firm, S.C.’s (Kohn) Motion
to Vacate this court’s Order Granting Imani Butler’s Motion for Sanctions for Violation of the
Discharge Injunction issued on September 10, 2025. The matter has been fully briefed and after
hearing the arguments presented by the parties, the Motion to Vacate is denied in part as explained
below. The court will schedule a hearing to hear evidence as to damages.
Factual Background
Ms. Butler financed a car through CNAC in April of 2019. In October of 2019, CNAC
repossessed the car when Ms. Butler fell behind on the payments. CNAC sold the car in February
of 2020, claiming a remaining balance of $11,494.19. 	CNAC, represented by Kohn, filed a
collection case to obtain a judgment for the remaining balance and was awarded judgment through
default in 2022. (Dkt. 34).
Ms. Butler filed a chapter 13 petition on August 13, 2024 listing CNAC as a creditor and
providing notice to it through Kohn who represented CNAC in the state court action. During the
pendency of the chapter 13 case, CNAC, with the continued representation of Kohn, pursued post
judgment collections, serving wage garnishments against Ms. Butler in violation of the automatic
stay. (Dkt. 60-61).1 Counsel for Ms. Butler states that between September 6, 2024 and September
1 Kohn was given notice in the chapter 13 case on August 14, 2024. (Case No. 24-11789, Dkt. 10).
Case 24-16719 Doc 65 Filed 01/07/26 Entered 01/08/26 12:57:30 Desc Main
Document Page 1 of 7

2
25, 2024, she informed Kohn that the automatic stay was in effect and collection efforts should
stop. 	CNAC and Kohn eventually complied and discontinued post judgment collections in
October of 2024. (Dkt. 32).2
The chapter 13 case was dismissed on October 30, 2024, and Kohn received notice of the
dismissal, both as CNAC’s counsel and individually, on November 2, 2024.3 	Just days later,
however, on November 6, 2024, Ms. Butler filed a chapter 7 petition (Dkt. 1) and received a
discharge on April 1, 2025. (Dkt. 29). The discharge order included discharge of claims held by
CNAC. Kohn received notice of the chapter 7 case as counsel for CNAC and individually as the
law firm at its Milwaukee, Wisconsin address on November 9, 2024 (Dkt. 12) and notice of the
Discharge Order on April 3, 2025. (Dkt. 30).
Despite the notice of discharge sent from the court on April 3, 2025, Kohn filed two more
Wage Deduction Notices on behalf of CNAC on June 3, 2025 and on July 10, 2025. (Dkt. 32). As
a result of the continued collection efforts on the now discharged CNAC claim, on August 18,
2025, Ms. Butler, through counsel, filed a motion to reopen her chapter 7 case to seek sanctions
against CNAC and Kohn for violation of the court’s Discharge Order. (Dkt. 32).
At the hearing on the Motion for Sanctions, neither Kohn nor CNAC appeared, and the
motion was granted after the court reviewed service and observed that Kohn was served both as
counsel for CNAC and individually. (Dkt. 34). The order required CNAC and Kohn to pay $93
per day starting August 28, 2025 until the state court garnishment action was dismissed,4 $5,000
for emotional distress, and $10,000 in punitive damages. (Dkt. 35). At the hearing, the court asked
Ms. Butler’s counsel why the requested sanctions were so high. 	Ms. Butler’s counsel told this
2 Ms. Butler has attached a copy of the state court docket but has not attached copies of the actual documents
which are referenced.
3 Case No. 24-11789 at Dkt. 23 and 34.
4 The court does not know if the garnishment action was ever dismissed.
Case 24-16719 Doc 65 Filed 01/07/26 Entered 01/08/26 12:57:30 Desc Main
Document Page 2 of 7

3
court that CNAC had previously violated the automatic stay and was fined $1,000, which clearly
had not deterred CNAC’s actions. The order stated that Ms. Butler’s counsel would be entitled to
fees. No fee petition was ever filed. The chapter 7 case was reclosed.
After neither CNAC nor Kohn complied with the terms of the Sanctions Order, Ms. Butler
filed a second motion to reopen her chapter 7 case, claiming CNAC and Kohn failed to comply
with the court’s sanction order. (Dkt. 38). 	This time, an attorney appeared representing CNAC
and Kohn and objected to the motion. (Dkt. 40). The court granted Ms. Butler’s motion to reopen
her case again and set the matter for hearing. (Dkt. 44). In a Joint Response to Debtor’s Motion
for Sanctions, CNAC and Kohn claimed that Kohn had misfiled the sanctions notice, so it was not
reviewed until September 10, 2025. (Dkt. 48). CNAC further claimed it did not receive notice of
the motion, and Kohn had never filed an appearance for CNAC in the chapter 7 case. Id.
The court held an evidentiary hearing on December 2, 2025 where both parties appeared
and were unprepared. The court continued the matter to January 7, 2025 for status (Dkt. 55) and
ordered the parties to brief the matter. (Dkt. 56). CNAC and Kohn filed a Motion to Vacate Order
Granting Sanctions claiming, without any evidence, that Ms. Butler’s employer never garnished
her wages and that CNAC never received proper notice under 7004 of the Federal Rules of
Bankruptcy Procedure (Dkt. 58). Kohn admitted that it mailed a Wage Deduction Notice to Ms.
Butler on June 3, 2025 and on July 10, 2025, arguing that it mistakenly believed that the only case
filed by Ms. Butler was the chapter 13 case, which had been dismissed. Kohn argued that it was
unaware of the chapter 7 case and apparently of the discharge injunction that had been entered on
April 1, 2025. (Dkt. 29).
Case 24-16719 Doc 65 Filed 01/07/26 Entered 01/08/26 12:57:30 Desc Main
Document Page 3 of 7

4
Discussion
A. Notice to Kohn and CNAC Was Proper.
The Seventh Circuit Court of Appeals has held that in a bankruptcy case in which a creditor
has been represented by an attorney in a collection action prior to or outside of bankruptcy, notice
of the bankruptcy petition sent to the attorney may be imputed to the creditor. In re Herman, 737
F.3d 449, 454 (7th Cir. 2013); In re Schicke, 290 B.R. 792, 803 (10th Cir. BAP 2003); In re Linzer,
264 B.R. 243, 248 (Bankr. E.D.N.Y. 2001). CNAC argues that because it did not receive service
as required under Rule 7004(3)(A) of the Federal Rules of Bankruptcy Procedure, it was not
properly served. This argument fails to acknowledge or distinguish the Seventh Circuit holding in
Herman that service is proper if made upon the attorney representing the creditor, such as Kohn,
in the collection actions ongoing at the time of the debtor’s filing.5 As explained in Herman and
more thoroughly in Schicke, the court must determine through a review of the entire circumstances
and, specifically, the relationship between CNAC and Kohn to decide whether Kohn acted as
CNAC’s agent. In re Herman, F.3d 449 at 454. In this instance it did. Kohn continued, even in
violation of the automatic stay in the prior chapter 13 case, to represent CNAC in collecting on the
state court judgment. In fact, Kohn admits that it was confused by the several bankruptcy petitions
that were filed by Ms. Butler and that it frequently represents CNAC in legal proceedings. (Dkt.
61).
Kohn also received proper notice of Ms. Butler’s filings in her chapter 7 petition as it
received notice for CNAC and notice was sent to Kohn separately. Kohn asserts that it should not
be punished, and neither should CNAC, for “maintaining case management systems which only
5 Each of the notices sent to Kohn identified that notice was being sent to CNAC in care of Kohn and
separately that notice was being sent to Kohn. It was clear that notice was not only for the law firm but also for the
client which it represented and continues to represent.
Case 24-16719 Doc 65 Filed 01/07/26 Entered 01/08/26 12:57:30 Desc Main
Document Page 4 of 7

5
address active matters for which proper notice has been received or retention exists.” (Dkt. 61).
CNAC and Kohn have stressed that Kohn made a mistake in sending the Wage Deduction Notices
because it was confused by Debtor’s back-to-back bankruptcy filings. This court is not responsible
for Kohn’s inability to properly screen the notices it receives. 	Kohn effectively received two
notices of every action in Ms. Butler’s chapter 7 case, and it should have been more diligent in
reading the notices it received and informing its client about Ms. Butler’s ongoing bankruptcy
proceedings.
B. CNAC and Kohn Have Not Met Their Burden Under Rule 59 or 60 of the Federal
Rules of Civil Procedure to Vacate the Judgment in its Entirety.
CNAC and Kohn argue that the Motion to Vacate should be granted under Rule 59 and 60
of the Federal Rules of Civil Procedure. The court does not agree. Rule 59 allows a party to seek
a new trial or to alter or amend a judgment, but this must be filed within 28 days after the entry of
judgment. Fed. R. Civ. Pro. 59(b). 	Here, neither CNAC nor Kohn responded to Ms. Butler’s
motion to reopen her case until October 10, 2025 (Dkt. 40), which was 30 days after the Order
Granting Motion for Sanctions. (Dkt. 35). 	CNAC also did not file its Motion to Vacate until
December 12, 2025, over two months after the final order. (Dkt. 58).
Rule 60 allows for relief from a final judgment, order, or proceeding when there is “newly
discovered evidence that, with reasonable diligence, could not have been discovered in time to
move for a new trial under Rule 59(b).” Fed. R. Civ. Pro. 60(b)(2). As notice was proper for both
CNAC and Kohn, any evidence that either believed should be presented to the court could have
been determined within a reasonable time and with reasonable diligence. 	At the most recent
hearing in December, Kohn and CNAC’s counsel stated that he spoke with someone at Amazon,
Ms. Butler’s employer, the evening prior and was told there was never a garnishment. 	This
Case 24-16719 Doc 65 Filed 01/07/26 Entered 01/08/26 12:57:30 Desc Main
Document Page 5 of 7

6
statement amounts to hearsay as no one from Amazon or otherwise was presented to testify as to
whether that was, in fact, true.6
Kohn admits to violating the court’s discharge order by sending two Wage Deduction
Notices to Ms. Butler to collect on the state court judgment. Section 524 of the Bankruptcy Code
makes clear that a discharge “operates as an injunction against the commencement or continuation
of an action, the employment of process, or an act, to collect, recover or offset any such debt as a
personal liability of the debtor.” 11 U.S.C. § 524(a)(2). 	A court may “impose civil contempt
sanctions when there is no objectively reasonable basis for concluding that the creditor's conduct
might be lawful under the discharge order.” Taggart v. Lorenzen, 587 U.S. 554, 560 (2019). Given
the clear and broad language of section 524 and the fact that Kohn received several notices related
to Ms. Butler’s chapter 7 petition and discharge, Kohn and CNAC violated the discharge injunction
under section 524 when Kohn sent two Wage Deduction Notices to Ms. Butler without an
objectively reasonable basis to believe it had the legal authority to send those notices.
C. The Damage Portion of the Order is Vacated to Determine Damages for Violation of
the Discharge Injunction.
Although this court finds no basis to vacate the portion of the Sanctions Order holding that
there was a clear violation of the discharge order, it is concerned about the appropriate damages.
When the court set a hearing date, it expected each side to bring in witnesses to support their
respective positions. They did not, and it was during that hearing that counsel for CNAC and Kohn
stated that there was no garnishment but did not provide proof. Similarly, counsel for Ms. Butler
stated, without proof, that she lost her apartment because of the garnishment notices. Finally, the
6 On December 2, 2025, the court expected the parties to bring in witnesses and to present evidence. Under
the Rule 43 of Federal Rules of Civil Procedure, parties presenting evidence must have witnesses available to testify
in open court. Fed. R. Civ. Pro. 43(a). None were present. Rule 9017 of the Federal Rules of Bankruptcy Procedure
makes Rule 43 of the Federal Rules of Civil Procedure applicable to bankruptcy proceedings. Fed. R. Bankr. Pro.
9017.
Case 24-16719 Doc 65 Filed 01/07/26 Entered 01/08/26 12:57:30 Desc Main
Document Page 6 of 7

7
damages include a large portion for a per diem that has continued to accrue although it was
intended only to continue so long as the garnishment order was in place. As a result of these loose
ends, the court will schedule a hearing at the earliest possible date for Ms. Butler to prove up her
damages, to determine whether the garnishment order continues, and for the presentation of an
attorney fee petition seeking reasonable fees.
Conclusion
The Motion to Vacate is denied in part because both CNAC and Kohn received notice of
Ms. Butler’s chapter 7 filings. Kohn, acting as CNAC’s agent, violated the discharge injunction
under Section 524 of the Bankruptcy Code. Damages will be determined by the court at a hearing
to be scheduled.
Dated: 1/7/2026 	___________________________
Honorable Deborah L. Thorne
United States Bankruptcy Judge
Case 24-16719 Doc 65 Filed 01/07/26 Entered 01/08/26 12:57:30 Desc Main
Document Page 7 of 7