Bankruptcy C-7 / Equitable Dist.: Date debt established?
PegT
listed is the $50k balance of a $72K amount labeled Equitable Distribution
stating monthly payments for 29 months. .
(I have filed a Complaint as to determine dischargeability. I feel I have a
strong case that all/part is in the nature of support. I have also filed a
Motion for Relief from Automatic Stay to allow me to seek modification of
the Agreement in NY.)
The Agreement stipulates that "if any payment is more than ten days late,
all remaining payments shall immediately be due". He stopped making payments
only AFTER he filed his petition. Does that mean, since the entire balance
became DUE only after the petition was filed, it should not be dischargeable
as debt incurred pre-petition? Can I seek to have payment enforced from
post-petition earnings?
I am doing all this pro se, so your help is most appreciated.
Peg
Stuart O. Bronstein
PegT wrote:
>
> My ex listed me as a creditor in his CT. Chapt 7 petition. The debt he
> listed is the $50k balance of a $72K amount labeled Equitable Distribution
> stating monthly payments for 29 months. .
I've seen this happen more times than I care to remember. If your ex
owed you money because he got some assets (e.g. the house) and that
debt wasn't secured, your only remedy may be to sue your divorce
lawyer.
> (I have filed a Complaint as to determine dischargeability. I feel I have a
> strong case that all/part is in the nature of support. I have also filed a
> Motion for Relief from Automatic Stay to allow me to seek modification of
> the Agreement in NY.)
I don't know the facts, but if it's for a division of property it's
likely not in the nature of support.
> The Agreement stipulates that "if any payment is more than ten days late,
> all remaining payments shall immediately be due". He stopped making payments
> only AFTER he filed his petition. Does that mean, since the entire balance
> became DUE only after the petition was filed, it should not be dischargeable
> as debt incurred pre-petition? Can I seek to have payment enforced from
> post-petition earnings?
No, it really doesn't mean anything in this context. If he continues
to owe the money the bankruptcy court will probably give him a payment
schedule, which may or may not be the same as in the order of the
divorce court. If he doesn't owe it to you any more, that's the end
in any case.
Stu
Horrigan
>became DUE only after the petition was filed, it should not be dischargeable
>as debt incurred pre-petition? Can I seek to have payment enforced from
>post-petition earnings?
>
>I am doing all this pro se, so your help is most appreciated.
It sounds like you need a lawyer, especially since the amount of money involved
is pretty large.
Your ex owes you the full $50,000. (I am intepreting your message to mean that
he started out with a $72,000 debt and made $22,000 in planned monthly payments
before he suddenly stopped paying you.) He owed you the full $50,000 even
before he missed the due dates for his most recent payments, so the full amount
of the debt goes into his bankruptcy estate (assuming it is a dischargeable
debt.) The only difference now is that his payments are overdue.
Child support payments are not dischargeable, but this debt may or may not be
dischargeable. Another thing to consider is the possibility that he may
actually be able to repay the debt.
One more thing: one rather nasty possible complication is that you may have to
give some of the money to his other creditors.
*****
Tim Horrigan <horr...@aol.com>
*****
Marianne Luban
"PegT" <pitw...@hvc.rr.com> wrote in message
news:7v3g4vcd7vrvt50il...@4ax.com...
> My ex listed me as a creditor in his CT. Chapt 7 petition. The debt he
> listed is the $50k balance of a $72K amount labeled Equitable Distribution
> stating monthly payments for 29 months. .
>
> (I have filed a Complaint as to determine dischargeability. I feel I have
a
> strong case that all/part is in the nature of support. I have also filed
a
> Motion for Relief from Automatic Stay to allow me to seek modification of
> the Agreement in NY.)
I would really be interested in how you do on that motion.
I am pretty sure it has to be denied. I know you said previously in another
forum that you thought you were ill-advised by someone when you stipulated
to the agreement, but my guess is the bankruptcy court will say that you are
stuck with the counsel you received and will not grant you leave to amend
any agreement with the debtor once he has petitioned for bankruptcy. If you
can convince the court that the debt should be exempt from discharge for
some reason, that is another story--but you will probably have to litigate
the matter in the bankruptcy court. Yours is not a pending family court
case that would not necessarily be affected by the automatic stay. Yours is
a "done deal" at this point, I'm afraid. But I daresay you want the opinion
of a lawyer on this and will not feel confident that it is so until you get
one. Anybody?
> The Agreement stipulates that "if any payment is more than ten days late,
> all remaining payments shall immediately be due". He stopped making
payments
> only AFTER he filed his petition. Does that mean, since the entire balance
> became DUE only after the petition was filed, it should not be
dischargeable
> as debt incurred pre-petition?
A debtor cannot pay any more on his debts once he has filed in the
bankruptcy court. Bankruptcy, I feel sure, does not exempt him from support
payments, though. That, as you know, is at the heart of your problem--that
you opted for equitable distribution instead of alimony.
You have to find some law that supports your position that bankruptcy should
not enable a man to cut off the share of an ex wife from the marital assets
under any circumstances.
> Can I seek to have payment enforced from
> post-petition earnings?
Only if the debt is not discharged.
> I am doing all this pro se, so your help is most appreciated.
>
> Peg
Disclaimer: I am not an attorney. This above should not be construed as
legal advice and is for discussion purposes only.
PegT
> > Does that mean, since the entire balance> >became DUE only after the
petition was filed, it should not be> >dischargeable as debt incurred
pre-petition? Can I seek to have > >payment enforced from post-petition
earnings?
> > It sounds like you need a lawyer, especially since the amount of money>
involved is pretty large.
No offense to the attorneys here, but I consulted with 4-5 about this and
decided to go it alone because 1) I do not have the $10k+ I was told to
expect in legal fees and 2)not one gave me enough confidence in their
interest to cause me to want to pay so much on blind faith. Sad, but true.
It seems that there are multitudes of lawyers who represent debtors, but
very few who have much expertise and/or interest in representing a creditor,
especially a non-business creditor, although I'd welcome proof to the
contrary. To make matters worse, the courts provide pro bono assistance for
debtors, but not for creditors.
> Your ex owes you the full $50,000. (I am interpreting your message to>
mean that he started out with a $72,000 debt and made $22,000 in planned
monthly payments before he suddenly stopped paying you.) He owed you the
full $50,000 even before he missed the due dates for his most recent
payments, so the full amount of the debt goes into his bankruptcy estate
(assuming it is a dischargeable debt.) The only difference now is that his
payments are overdue.
> Child support payments are not dischargeable, but this debt may or may
not be dischargeable.
I believe I can make a good case for nondischargeability based on the amount
being 'in the nature of support'. Having given up my business at his request
'for the good of the marriage', and having sold my house because he was
tired of his long commute, investing the equity in a handy-man special under
our agreement that he would pay the bills while I did the necessary repairs
and renovations if I agreed to 'this' house, I was left with a barely
livable house and no job. I agreed to refinance in my name, paying off the
original mortgage in his name. His payments were supposed to cover my
mortgage until I could complete the work and sell the house.
>Another thing to consider is the possibility that he may actually be able
to repay the debt.
Had he not voluntarily more than doubled his monthly rent expense, had he
not bought 2 new cars and a hair transplant as soon as the divorce was
final, had his new wife not quit her full time job to go to school, had he
not lied about her child support payments paying half their rent, etc. etc.,
he would have been able to repay his debt to me. It's pretty evident that he
chose to go on a spending joy ride in order to make himself eligible for
Chapter 7 and thereby be relieved of his obligation to me. At the risk of
sounding like sour grapes, isn't it a bit unjust that they would let him
keep 3 cars, voluntarily support his new wife, not to mention keeping his
new hair, and let me lose my house and my entire life savings? (A bit of
other trivia: he is 35, I am 55, I was/am unemployed, he earns $125k+, I
have no degree, he has a PhD, he has full benefits and a generous 40lk, all
I had was the equity in my house and I am paying with credit cards the
medical insurance premiums he agreed to pay, but chose never to make one
payment,etc. etc.)
> One more thing: one rather nasty possible complication is that you may
have to give some of the money to his other creditors.
Give WHAT money?!! It's not as if I was able to sock any of what he did pay
away for a rainy day. That would surely be salt in the wound.
Peg <pitw...@hvc.rr.com>
PegT
"Stuart O. Bronstein" <s...@lexregia.com> wrote in message
news:4a2l4vscd4tbpvod9...@4ax.com...
>
>
> PegT wrote:
> >
> > My ex listed me as a creditor in his CT. Chapt 7 petition. The debt he
> > listed is the $50k balance of a $72K amount labeled Equitable
Distribution
> > stating monthly payments for 29 months. .
>
> I've seen this happen more times than I care to remember. If your ex
> owed you money because he got some assets (e.g. the house) and that
> debt wasn't secured, your only remedy may be to sue your divorce
> lawyer.
Unfortunately, I didn't formally retain a divorce lawyer, although I had
consultations with a few. I am trying to find the grounds to sue the
Mediator/Lawyer who drew up the Settlement Agreement. based on what I belive
was misinformation and probably overreaching (?). She had told us that there
was NO difference in ramifications to either, except tax ramifications, as
long as we agreed on an amount, whether the amount was called support or
equitable distribution. She further took it upon herself to add to the
Equitable Distribution clause: "this is not dischargeable in bankruptcy".
I had no cause to question her furhter until I found my ex filed and named
it as debt to be discharged.
>
> > (I have filed a Complaint as to determine dischargeability. I feel I
have a
> > strong case that all/part is in the nature of support. I have also
filed a
> > Motion for Relief from Automatic Stay to allow me to seek modification
of
> > the Agreement in NY.)
>
> I don't know the facts, but if it's for a division of property it's
> likely not in the nature of support.
The only property we owned was the house. I recieved ownership in return for
paying off ex's mortgage. Since there was no equity...that was a wash. And
since that was the only property we had, I don't see how the equitable
distribution could be construed as division of property.
And, it was clear from the circumstances that I needed support since I was
unemployed, having given up my business for the good of the marriage, and
had given up the equity in my house (my only savings).
>
> > The Agreement stipulates that "if any payment is more than ten days
late,
> > all remaining payments shall immediately be due". He stopped making
payments
> > only AFTER he filed his petition. Does that mean, since the entire
balance
> > became DUE only after the petition was filed, it should not be
dischargeable
> > as debt incurred pre-petition? Can I seek to have payment enforced from
> > post-petition earnings?
>
> No, it really doesn't mean anything in this context. If he continues
> to owe the money the bankruptcy court will probably give him a payment
> schedule, which may or may not be the same as in the order of the
> divorce court.
I didn't realize the bk court coult reschedule payments if it deems the debt
nondischargeable.
If he doesn't owe it to you any more, that's the end
> in any case.
There's always appeal in that case?
>
> Stu
>
PegT
"Marianne Luban" <mluba...@earthlink.net> wrote in message
news:7a2l4vkunoidnt7c7...@4ax.com...
>
> "PegT" <pitw...@hvc.rr.com> wrote in message
> news:7v3g4vcd7vrvt50il...@4ax.com...
> > My ex listed me as a creditor in his CT. Chapt 7 petition. The debt he
> > listed is the $50k balance of a $72K amount labeled Equitable
Distribution
> > stating monthly payments for 29 months. .
> > (I have filed a Complaint as to determine dischargeability. I feel I
have a strong case that >>all/part is in the nature of support. I have
also filed a Motion for Relief from Automatic Stay to >>allow me to seek
modification of the Agreement in NY.)
> I would really be interested in how you do on that motion.
> I am pretty sure it has to be denied.
On what grounds do you believe it must be denied?
>I know you said previously in another
> forum that you thought you were ill-advised by someone when you stipulated
to the agreement, >but my guess is the bankruptcy court will say that you
are stuck with the counsel you received
But the bankkruptcy court looks to the intention of the parties when
agreeing to a settlement. If we relied on counsel that was clearly wrong I
would think that it might be proved that we did not intend to agree to it as
written.
>and will not grant you leave to amend any agreement with the debtor once he
has petitioned for >bankruptcy. If you can convince the court that the
debt should be exempt from discharge for
> some reason, that is another story--but you will probably have to litigate
the matter in the >bankruptcy court.
I am litigating it in the bankruptcy court, but I feel that unless I get a
ruling from the divorce court, I stll have no protection. If this bankruptcy
case is dismissed by the Trustee, ex could always file again in 6 months and
I'd be in the same boat as I am now unless my case against dischargeability
is tried before the Trustee's possible case to dismiss his petition.
Yours is not a pending family court
> case that would not necessarily be affected by the automatic stay. Yours
is
> a "done deal" at this point, I'm afraid. But I daresay you want the
opinion
> of a lawyer on this and will not feel confident that it is so until you
get
> one. Anybody?
I have had several opinions from lawyers. None have given me a good sense of
whether they feel I have a strong case or not. All only concur that it will
cost appox. $10k in bankruptcy court and another $10k in divorce court to
find out. I do not have the means to pay for either, so I will have to
proceed with both on my own.
> > The Agreement stipulates that "if any payment is more than ten days
late,
> > all remaining payments shall immediately be due". He stopped making
payments
> > only AFTER he filed his petition. Does that mean, since the entire
balance became DUE only >.>after the petition was filed, it should not be
dischargeable as debt incurred pre-petition?
> A debtor cannot pay any more on his debts once he has filed in the
bankruptcy >court. Bankruptcy, I feel sure, does not exempt him from support
payments, though. That, as you > know, is at the heart of your
problem--that you opted for equitable distribution instead of alimony.
> You have to find some law that supports your position that bankruptcy
should not enable a man >to cut off the share of an ex wife from the
marital assets under any circumstances.
I believe that is one of the points being addressed in the proposed
bankruptcy law ammendments. Unfortunatly that will not help me now. It is a
terrible law that can take a judgement recently obtained from one court and
dismiss it in another.
Peg
Timothy Horrigan
>
> I believe I can make a good case for nondischargeability based on the amount
> being 'in the nature of support'. Having given up my business at his request
> 'for the good of the marriage', and having sold my house because he was
> tired of his long commute, investing the equity in a handy-man special under
> our agreement that he would pay the bills while I did the necessary repairs
> and renovations if I agreed to 'this' house, I was left with a barely
> livable house and no job. I agreed to refinance in my name, paying off the
> original mortgage in his name. His payments were supposed to cover my
> mortgage until I could complete the work and sell the house.
>
My layperson's opinion is that none of this turns a debt which is not
alimony into alimony. It sounds like he gave you the house and also
agreed to pay you $72k for your other assets. But he didn't agree to
pay alimony or support per se.
Your case is not as weak as it sounded in your original post, but I am
still not convinced that your strategy is a winning one. But it might
be worth a shot, especially if you can get away without paying $20k in
legal fees.
>
> > One more thing: one rather nasty possible complication is that you may
> have to give some of the money to his other creditors.
>
> Give WHAT money?!! It's not as if I was able to sock any of what he did pay
> away for a rainy day. That would surely be salt in the wound.
>
He ran up large debts right before declaring bankruptcy, BUT he paid
off a large fraction of his debt to you. And you qualify as a "friend
or family member" which complicates things even further.
I know it sucks, but it is quite possible that you will end up having
to pay off part of his debt. In essence, he borrowed from his other
creditors to pay your debt, and he is not allowed to do that. And you
had some inkling he was doing this, although you could be liable even
if you had no idea what was going on.
On the positive side, however, it is also possible that his debt to
you will not be discharged at all. However, the due dates of the
payments has NOTHING to do with this: he owes you the FULL $50k, not
just the payment or two or three which he missed just before the
bankruptcy filing--- so the FULL $50k is either dischargeable or not
dischargeable, as the case may be. It's like a credit card balance:
the amount of your debt is the amount of the total balance, not just
the amount of your unpaid minimum payments.
Stuart O. Bronstein
PegT wrote:
>
> No offense to the attorneys here, but I consulted with 4-5 about this and
> decided to go it alone because 1) I do not have the $10k+ I was told to
> expect in legal fees and 2)not one gave me enough confidence in their
> interest to cause me to want to pay so much on blind faith. Sad, but true.
> It seems that there are multitudes of lawyers who represent debtors, but
> very few who have much expertise and/or interest in representing a creditor,
> especially a non-business creditor, although I'd welcome proof to the
> contrary. To make matters worse, the courts provide pro bono assistance for
> debtors, but not for creditors.
In bankruptcy cases I have almost exclusively represented creditors -
generally small businesses or individuals. My guess is that you just
don't like the information they are giving you.
> I believe I can make a good case for nondischargeability based on the amount
> being 'in the nature of support'. Having given up my business at his request
> 'for the good of the marriage', and having sold my house because he was
> tired of his long commute, investing the equity in a handy-man special under
> our agreement that he would pay the bills while I did the necessary repairs
> and renovations if I agreed to 'this' house, I was left with a barely
> livable house and no job. I agreed to refinance in my name, paying off the
> original mortgage in his name. His payments were supposed to cover my
> mortgage until I could complete the work and sell the house.
I'm not familiar with NY law on this subject. But from what I've seen
in California unless the order expressly calls something support as
opposed to a property division, the bankruptcy court will not be much
help at all on this point.
> Had he not voluntarily more than doubled his monthly rent expense, had he
> not bought 2 new cars and a hair transplant as soon as the divorce was
> final, had his new wife not quit her full time job to go to school, had he
> not lied about her child support payments paying half their rent, etc. etc.,
> he would have been able to repay his debt to me. It's pretty evident that he
> chose to go on a spending joy ride in order to make himself eligible for
> Chapter 7 and thereby be relieved of his obligation to me. At the risk of
> sounding like sour grapes, isn't it a bit unjust that they would let him
> keep 3 cars, voluntarily support his new wife, not to mention keeping his
> new hair, and let me lose my house and my entire life savings? (A bit of
> other trivia: he is 35, I am 55, I was/am unemployed, he earns $125k+, I
> have no degree, he has a PhD, he has full benefits and a generous 40lk, all
> I had was the equity in my house and I am paying with credit cards the
> medical insurance premiums he agreed to pay, but chose never to make one
> payment,etc. etc.)
Certainly it's not fair. Unfortunately bankruptcy often isn't about
what's fair. It's about what the law says.
If you can prove he incurred expenses intending to file bankruptcy,
you may be able to get his case thrown out. But don't hold your
breath.
> Give WHAT money?!! It's not as if I was able to sock any of what he did pay
> away for a rainy day. That would surely be salt in the wound.
The rule is that if you received money from him within 90 days (or
perhaps up to a year) before he filed bankruptcy, and that money was
paid to you past the date it was due, you may be required to give
share it with other creditors. Based on what you said I doubt this
will be a problem.
But you never responded to my inquiry as to whether you either did or
could have gotten some sort of security for his debt to you. For
example, if he owes you money could it have been secured by a mortgage
in a home you both owned?
If so and you did not get that security, you're more likely to get
money back from your divorce lawyer than from your ex in bankruptcy.
Stu
Marianne Luban
>
> "Marianne Luban" <mluba...@earthlink.net> wrote in message
> news:7a2l4vkunoidnt7c7...@4ax.com...
> >
> > "PegT" <pitw...@hvc.rr.com> wrote in message
> > news:7v3g4vcd7vrvt50il...@4ax.com...
> > > My ex listed me as a creditor in his CT. Chapt 7 petition. The debt he
> > > listed is the $50k balance of a $72K amount labeled Equitable
> Distribution
> > > stating monthly payments for 29 months. .
>
> > > (I have filed a Complaint as to determine dischargeability. I feel I
> have a strong case that >>all/part is in the nature of support. I have
> also filed a Motion for Relief from Automatic Stay to >>allow me to seek
> modification of the Agreement in NY.)
>
> > I would really be interested in how you do on that motion.
> > I am pretty sure it has to be denied.
>
> On what grounds do you believe it must be denied?
Because one of the purposes of the automatic stay
is to protect the debtor from "the commencement or
continuation of lawsuits".
"When a divorce or separation agreement or judgment creates a debt in favor
of the former spouse, those non support obligations to the former spouse may
be excluded from the Chapter 7 bankruptcy discharge. 11 U.S.C. 523(a)15.
The creditor spouse doesn't have to prove fraud or dishonesty; he or she
must prove that discharge of the debt creates a greater hardship on the
creditor spouse than excluding the debt from discharge would create for the
debtor spouse.
These non support, marital debts are non dischargeable only if the
creditor/spouse files an adversary proceeding within 60 days of the first
meeting of creditors. (The rule for support debts is different: they are
non dischargeable without action on the part of the benefited party).
Bankruptcy and enforcement of marital settlement agreements---
The Bankruptcy Code recently made non support obligations created in
connection with a divorce or separation nondischargeable in Chapter 7 if
discharge of the obligation would harm the non debtor spouse more than it
would benefit the debtor. 11 U.S.C. 523 (a)15.
Unlike support obligations, which are non dischargeable without the
necessity of action on the part of the recipient spouse, these marital
separation obligations survive the bankruptcy only if the non debtor spouse
files a timely action to except the debt from discharge."
http://www.bankruptcy-expert.com/familyFAQ.htm#Bankruptcy
Disclaimer: I am not an attorney. This should not be construed as legal
advice. It is for discussion purposes only.
Marianne Luban
> Bankruptcy and enforcement of marital settlement agreements---
> The Bankruptcy Code recently made non support obligations created in
> connection with a divorce or separation nondischargeable in Chapter 7 if
> discharge of the obligation would harm the non debtor spouse more than it
> would benefit the debtor. 11 U.S.C. 523 (a)15.
As an afterthought to my last post, I researched the language of 523 (a) 15
of the Bankruptcy Code. It is:
(15)
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, a
determination made in accordance with State or territorial law by a
governmental unit unless -
(A)
the debtor does not have the ability to pay such debt from income or
property of the debtor not reasonably necessary to be expended for the
maintenance or support of the debtor or a dependent of the debtor and, if
the debtor is engaged in a business, for the payment of expenditures
necessary for the continuation, preservation, and operation of such
business; or
(B)
discharging such debt would result in a benefit to the debtor that outweighs
the detrimental consequences to a spouse, former spouse, or child of the
debtor;
Arthur L. Rubin
> (I have filed a Complaint as to determine dischargeability. I feel I have a
> strong case that all/part is in the nature of support. I have also filed a
> Motion for Relief from Automatic Stay to allow me to seek modification of
> the Agreement in NY.)
I am not a lawyer -- but you might consider the possibility of a
modification of the support agreement AFTER the bankruptcy is closed.
It seems possible. I must admit that the payment of a fixed dollar
amount over a fixed period sounds more like a settlement than like
support, but....
--
Arthur L. Rubin 216-...@mcimail.com
(Service to terminate in June 2003 -- watch my posts for a new
contact address.)
Timothy Horrigan
> > all remaining payments shall immediately be due". He stopped making payments
> > only AFTER he filed his petition. Does that mean, since the entire balance
> > became DUE only after the petition was filed, it should not be dischargeable
> > as debt incurred pre-petition? Can I seek to have payment enforced from
> > post-petition earnings?
>
> No, it really doesn't mean anything in this context. If he continues
> to owe the money the bankruptcy court will probably give him a payment
> schedule, which may or may not be the same as in the order of the
> divorce court. If he doesn't owe it to you any more, that's the end
> in any case.
>
There are three things going here. PegT's ex-husband has divorced
her, he has filed for bankruptcy AND he has defaulted on his debt to
her. Even if he had not defaulted on her debt before he filed for
bankruptcy, the full amount of the debt is what goes (or which does
not go, if the debt turns out to be undischargeable or if the
bankruptcy petition is denied) into the bankruptcy estate.
But it might be interesting to find out what the divorce agreement
says about what happens if he fails to pay the full amount (once it
all becomes due after he fails to make his installment payments.) It
is possible that he put up some property as collateral, although we
have been told that this is an unsecured debt, which means it probably
IS an unsecured debt!
> Stu
Stuart O. Bronstein
"Arthur L. Rubin" wrote:
> "PegT" <pitw...@hvc.rr.com> wrote in message
>
> > (I have filed a Complaint as to determine dischargeability. I feel I have a
> > strong case that all/part is in the nature of support. I have also filed a
> > Motion for Relief from Automatic Stay to allow me to seek modification of
> > the Agreement in NY.)
>
> I am not a lawyer -- but you might consider the possibility of a
> modification of the support agreement AFTER the bankruptcy is closed.
> It seems possible. I must admit that the payment of a fixed dollar
> amount over a fixed period sounds more like a settlement than like
> support, but....
Good idea. You'd probably have to get concent from the bankruptcy
court before you do that, however.
Stu