Attorney Fee Judgments in Bankruptcy

[Novice]

My question involves bankruptcy in the state of: NJ

I filed for Chapter 7 bankruptcy last year, and received a full discharge.

Several months prior to my filing BK, an Order was issued in Family Court, awarding attorney fees to my ex-spouse, due to a violation on my part of procedure established within our Matrimonial Settlement.

I expected that this attorney fee judgment would be discharged, as it was not awarded as spousal or child support.

Prior to my meeting of the creditors, my ex-spouse's attorney threatened to file an adversarial motion in my BK case, claiming that the judgment was awarded as spousal/child support, in order to tie things up and to seek additional fees to be awarded him for his motion, if I listed this judgement among my debts. My BK attorney advised me that the cost to contest such an adversarial motion would far exceed the amount of the judgment itself, and that we should leave the amount out.

I would like to know now, if this judgment is still discharged by my bankruptcy, despite not being specifically listed among my debts.

Thank you for your help.

[despritfreya]

I filed for Chapter 7 bankruptcy last year, and received a full discharge. Several months prior to my filing BK, an Order was issued in Family Court, awarding attorney fees to my ex-spouse, due to a violation on my part of procedure established within our Matrimonial Settlement. I expected that this attorney fee judgment would be discharged, as it was not awarded as spousal or child support. . . My BK attorney advised. . . that we should leave the amount out.

Sorry, but if your attny told you not to list a debt you owe, he/she should not be practicing bk law. You are required to list ALL debt.

I assume you were ordered to pay the attny fees to your ex-spouse.

As to the discharge of the debt, while it may not be support and therefore not covered under 11 USC 523(a)(5) it is a debt “to a spouse, former spouse. . . that is incurred by the debtor in the course of a divorce. . . or in connection with. . . a divorce decree. . . or other order of a court of record. . .” as contemplated under 11 USC 523(a)(15). As a result, in the context of a Chapter 7, regardless of whether or not it was listed, and regardless of whether or not an adversary proceeding was filed, it, in my opinion, was not discharged.

Des.

[Novice]

Sorry, I should restate my previous comments.

I reviewed my notes, and what had happened and what my BK attorney had said was that, I had originally omitted the judgment owed to my ex-wife from my schedule of debts in my petition because I was under the impression that it was not dischargeable. Both I, and my BK attorney were under the impression that the judgment was a spousal/child support award.

Subsequently, the judge who had issued the order clarified that he had issued it as a penalty "fee award" due to my violation of protocol and specifically not as spousal support.

The judge had ordered that the fee judgment (and the check that my ex spouse held for it's payment) would be governed by the automatic stay, until resolved by my BK. During the automatic stay, my ex spouse cashed the check. My BK attorney contacted my ex spouse's attorney to demand that the money be returned. At that point, my ex's attorney made the threat to file an adversarial motion in the BK case, in order to tie up my proceedings, and cost me additional money.

My BK attorney advised me that the cost of him attempting to recover the funds under the rules of the automatic stay, would exceed the amount of the funds themselves, and he felt I should not pursue.

Not sure if this makes any difference, but thank you for the response regardless.

I'm not certain how to interpret this rule. In my case, the fee award was ordered in regard to a breach of protocol on my part, in seeking a post-judgment modification of the MSA. It was not ordered in the course of the divorce or separation; It was ordered in response to a motion requesting modification. Does a request for modification equate to, "in connection with a separation agreement, divorce decree or other order of a court of record"?

"11 USC § 523 - Exceptions to discharge

(a) A discharge under section 727, 1141, 1228 (a), 1228 (b), or 1328 (b) of this title does not discharge an individual debtor from any debt—

(15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit;"

[despritfreya]

Sorry, I should restate my previous comments.

Agreed since the actual facts, as you have now laid them out, are quite different from what you initially stated.

my BK attorney had said. . .that I had originally omitted the judgment. . . because I was under the impression that it was not dischargeable.

Ok, so he did not give you bad advice.

Both I, and my BK attorney were under the impression that the judgment was a spousal/child support award. Subsequently, the judge who had issued the order clarified that he had issued it as a penalty "fee award" due to my violation of protocol and specifically not as spousal support.

So, you did what you needed to do and got it clarified. Now there is no confusion. It is not subject to 523(a)(5) since it is not “in the nature of support”.

The judge had ordered that the fee judgment (and the check that my ex spouse held for it's payment) would be governed by the automatic stay, until resolved by my BK.

That would be correct since collection of a non-dischargeable debt is still stayed until the entry of the discharge - with the exception of the collection of support from property that is not property of the estate.

During the automatic stay, my ex spouse cashed the check.

Sounds like that was a violation of the state court judge’s order.

My BK attorney contacted my ex spouse's attorney to demand that the money be returned. At that point, my ex's attorney made the threat to file an adversarial motion in the BK case. . .

Probably something that needs to be done to determine if the judgment is subject to 523(a)(15). This adversary can be brought by either party, at any time.

My BK attorney advised me that the cost of him attempting to recover the funds under the rules of the automatic stay, would exceed the amount of the funds themselves, and he felt I should not pursue.

Probably good advice.

I'm not certain how to interpret (523(a)(15)). In my case, the fee award was ordered in regard to a breach of protocol on my part, in seeking a post-judgment modification of the MSA. It was not ordered in the course of the divorce or separation; It was ordered in response to a motion requesting modification. Does a request for modification equate to, "in connection with a separation agreement, divorce decree or other order of a court of record"?

I would have to do some research on this and, if I can find the time, I just might. It is possible that the award is not covered by (a)(15). This is why you would need to research the law and, if appropriate, file the Complaint under (a)(15) for a final determination by the bk judge. The Complaint can be filed at any time. If necessary, your case can be reopened for the filing of such a Complaint but, the timing to reopen must be reasonable - not - say - 5 years from now.

By the way, if the obligation is not covered by (a)(5) but IS covered by (a)(15) it is not dischargeable in a 7 BUT would have been dischargeable in a Chapter 13. So, how much is the judgment for and, if you have not received your discharge, have you thought about converting to a 13?

Des.

[Novice]

Sorry, I opened a new thread related to this matter having not seen the response on the old thread.

The judgement amount is fairly small ($1500). My check was cashed in violation of the automatic stay, but I'm not as interested in pursuing anything regarding the violation as I am in just having my money returned. I'm uncertain as to whether I would need to receive some declaration that the party was in violation in order to have a refund ordered, or if a determination by the Bankruptcy court that the debt was discharged would be sufficient.

In either case, the amount in question does not really justify retaining an attorney to pursue, and I would like to handle it pro se if possible. Additionally, the attorney who represented me in petitioning for Chapter 7 is no longer available.

[Mr. Knowitall]

If you are stating that you chose not to include the debt in your bankruptcy schedules, chose not to take action in either the family court or the bankruptcy court prior to discharge, and that the debt was fully paid prior to discharge, I don't think you're going to get anywhere in the bankruptcy court. But if you want to try, you would need to file an appropriate motion in the bankruptcy court, supported by your legal authority that (a) the debt was dischargeable, (b) that remains the case even though you did not include the debt in your schedules and paid the debt prior to discharge and (c) your delay in seeking relief did not waive your right to a discharge.