Summary:
In this Chapter 7 case, the erstwhile interim 6th Congressional District chair for the Democratic Party Sabrina Berry sought sanctions under § 362(k) against creditor (and political rival) Dr. Grace Galloway, alleging that Galloway’s April 2025 Facebook posts and comments at a May 10 district political convention accusing Berry of theft were a willful violation of the automatic stay. The dispute arose after Berry filed bankruptcy on March 31, 2025, listing Galloway as a $3,900 unsecured creditor from a 2023 judgment. Days before the convention, Galloway announced her own candidacy for the same district chair position and publicly referenced the debt.
Berry claimed Galloway’s social media and in-person remarks were an attempt to shame her into payment. Galloway denied any collection intent, asserting her speech was part of a political campaign and protected under the First Amendment. The court found the most credible evidence showed minimal interaction at the convention, no direction to others to pressure Berry, and that Berry could not even see the Facebook posts unless shown by third parties. While the posts “toed the line,” they were not attempts to collect a debt but rather political speech about Berry’s qualifications for office.
Judge Edwards further held that even if the conduct might otherwise implicate § 362(a)(6), political campaign speech on a candidate’s financial history “occupies the highest rung of the hierarchy of First Amendment values” and likely could not constitutionally be sanctioned under § 362(k). The motion was denied.
Additionally, there are multiple Adversary Proceedings pending in this bankruptcy case seeking to have debts declared nondischargeable based on allegations of fraud by the Debtor.
Commentary:
Although the opinion is circumspect about the political affiliations of Berry and Galloway, it is hard to ignore the subtext. The April 2025 dust-up — played out both online and in the middle of a contested party convention — ended not with a victory for either, but with the floor-nomination and election of Susan Smith as district chair. This public defeat, coupled with the courtroom airing of grievances in August, may well have been an unspoken catalyst for Berry’s June 6, 2025 defection to the Republican Party, as later trumpeted in the NC GOP’s own press release.
From a bankruptcy practitioner’s perspective, the decision highlights two key points. First, § 362(a)(6) remains aimed at collection activity, not political opposition research, even when the “research” is personal, unflattering, and debt-related. Second, in a collision between bankruptcy’s protections and core political speech, courts will tread very carefully, if not defer entirely, to First Amendment safeguards. Debtor’s counsel should be mindful that in a campaign context, even factually accurate but reputationally damaging statements about a debt may be insulated from sanctions, absent clear evidence of coercive collection intent.
And for those whose political aspirations run parallel to their bankruptcy cases, the lesson may be simple: the automatic stay is a shield against collection, not a cloak of invisibility against your rivals on the convention floor — especially if they, too, have “receipts in hand.”
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