Citizens Bank of Maryland v. Strumpf

When Strumpf (defendant) filed for Chapter 13 bankruptcy, he held a checking account with Citizens Bank of Maryland (plaintiff) and owed the bank on a defaulted loan. The bankruptcy petition triggered an automatic stay barring setoff of prebankruptcy debts. Citizens placed an administrative hold on Strumpf's account, freezing withdrawals that would drop the balance below his loan debt, then five days later moved the bankruptcy court for relief from the stay to formally offset the debt. Strumpf moved to hold Citizens in contempt for violating the stay; the bankruptcy court agreed the hold was a prohibited setoff and sanctioned Citizens before later granting Citizens' stay-relief motion, by which point Strumpf had drained the account.