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  1. #1
    Join Date
    Mar 2012

    Default Bankruptcy and Child Support Assignment

    My question involves bankruptcy in the state of: Utah

    Several years ago, my wife and I were divorced. During the proceedings my wife was awarded judgments totalling $120,000 in alimony arrearage and judgments totalling $45,000 in child support arrearage (based on erroneous salary information). Toward the end of the divorce, my wife took one of the child support arrearage judgments (in the amount of $21,000) and assigned it to her attorney to defray some of her attorney fees. This was done unbeknownst to me, or my attorney.

    A year after the divorce, when a case I filed with the Utah Court of Appeals was pending, my wife and I came to a global settlement. She waived the alimony arrearage and waived all child support arrearage. I provided here with a promissory note in the amount of $45,000 (yes, my wife assigned to me the judgments listed above, including the $21,000 judgment that she had previously assigned to her attorney -- unlawful, deceitful, and unethical). Nevertheless, I have been paying on this monthly ever since.

    In December of 2012, I began working on a Chapter 7 bankrtupcy. I found out that the Attorney had filed a lawsuit against me, and had received a default judgment (never notified of the pre-trial conference, or the hearing). So, I added the $21,000 judgment to my Chapter 7 bankruptcy. He filed an Adversary Proceeding indicating that the $21,000 was child support and should not be discharged.

    Do I have a leg to stand on in the BK court, or should I just allow it to be deemed non-dischargeable and seek to have the judgment set aside in the District Court?

    I had heard that if the assignment by the non-paying spouse was voluntary, that it could be discharged. Also, I heard that if it fails to provide benefit to the non-paying spouse (the promissory note would necessarily be modified by subtracting the $21,000, which certainly doesn't benefit my ex-wife), that it could be discharged.

    Any thoughts. Your comments would be greatly appreciated.

  2. #2
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: Bankruptcy and Child Support Assignment

    You, with or without the help of your lawyer, can start by investigating the judgment held by the lawyer - when and how it was obtained and why you were not served. From what you seem to be saying, your wife was the plaintiff in that lawsuit and obtained a judgment against you for support arrears, then assigned the judgment to her lawyers in satisfaction of some of her attorney fees. They are now claiming that the judgment is in the nature of child support and is nondischargeable. If that's the case, I think you'll find the following case (albeit not from your district) to be helpful - Simon, Schindler & Sandberg, LLP v. Gentilini (In re Gentilini), 365 B.R. 251, 255 (Bankr.S.D.Fla.2007). I think the reasoning is sound - the policy of nondischargeability of support obligations "has no application where, as here, discharge of the Fee Judgment will have no affect on the Former Spouse". (Note footnote 1, discussing the former language of the Bankruptcy Code, and the removal of the assignment provision from the current version.)

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