[WSBAPT] Question not related to probate- a Ch. 13 bankruptcy question

Tue Feb 21 15:44:51 PST 2023

  Law Office of
F.ANDREKITA SILVA
_______________________________________________________  

February  21, 2023

Ann,

The wife received 6 months of modest temporary maintenance. However,  
it terminated the month before the decree was entered. The idea was  
that equity would be done in the property distribution. Were the  
maintenance still been in effect, she could return to the family law  
department (divorce court ) to request a modification. But, that  
option is not available as there is no maintenance to modify.

I have found the case of Emery v. Edrington, a 9th circuit case that  
discusses “owelty” liens (which are divorce lients) and their  
dischargeability and/ or non dischargeability. If the owelty arose as  
a result of an agreement and if it is secured, then it is possible it  
is not be dischargeable under ss1328(a). 

But, I am not yet confident about if I understand the bankruptcy  
subject and process. In the Emery case, the wife’s judgment didn’t  
arise through an agreement and the language of the order didn’t  
specifically secure the judgment with the real estate. Our case is a  
little different so I have to research a little further.

I think you’re right that if we can show that the judgment were in the  
nature of support, it could be found not dischargeable. Although that  
WAS the whole point of the judgment, I’m not sure that there is any  
language in the order that specifically says that. So, I’m going to  
try to get more information on that as well.

Thank you for your comment.

andrekita
Law Office of F. Andrekita Silva
1325 Fourth Avenue, Suite 2000
Seattle, Washington 98101
206-224-8288
www.seattle-silvalaw.com[1]

Quoting Ann Manley <ann at manleyfirm.com>:

> I tell my Chapter 13 clients that the non-filing ex-spouse could go  
> back to family law court and get the divorce decree adjusted - maybe  
> adding in a spousal maintenance payment since the property  
> settlement isn't going to be paid. I've never seen it happen,  
> though. And the non-filing ex-spouse would have to get relief from  
> the automatic stay in order to proceed in family law court.       
>    Or maybe you could argue that the property settlement is actually  
> in the nature of support and so is non-dischargeable?
>
>                                    Ann Manley, Esq.
>          The Manley Law Firm, P.S., Inc.
>          PO Box 16324
>          Seattle, WA 98116
>          (206)292-3064[2] / (206)292-3914[2] fax
>          www.manleyfirm.com[3]
>
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>      On Tue, Feb 14, 2023 at 10:32 PM Andrekita Silva  
> <ak at seattle-silvalaw.com> wrote:
>
>> _Law Office of
>> F.ANDREKITA SILVA
>> _______________________________________________________  
>>                                                             
>> February  14, 2023
>>  
>> Listserve,
>>  
>> I have a question unrelated to probate.
>>  
>> This is a bankruptcy question.
>>  
>> I know that divorce property settlement agreements are NOT  
>> dischargeable in Chapter 7 bankruptcy.
>> Based on my research, I understand PSA agreements in divorce cases  
>> ARE dischargeable in Ch. 13.
>>  
>> However, I am confused as to whether there are SOME  circumstances  
>> under which they can be discharged in Chapter 13.
>>  
>> I understand that an unsecured debt is non- dischargeable. In my  
>> case, the parties’ settlement agreement reached in mediation stated  
>> that H would refinance the home within 3-6 months to pay $165K to  
>> the wife for her interest in community property. If he did not  
>> refinance, then he was required to place the home on the market for  
>> sale at the 6 month point. Wife was to receive a judgment. CR2A and  
>> final Decree said wife’s judgment would be paid from the proceeds  
>> of the sale of home. At the six month point, 12/26/2022, a judgment  
>> was entered in favor of wife. There was no deed of trust executed  
>> to secure the debt owed to wife. On 1/5/2023, H ordered to place  
>> the home for sale on or before 1/31/2023. The day before he was to  
>> do so, he filed Ch.13 bankruptcy petition.
>>  
>> There should have been equity of $277K in home. After execution of  
>> CR2A in May 2022, real estate market began to drop. Now only $181K  
>> in equity- according to Zillow and King Cty Assessment (and  
>> bankruptcy schedule.)
>>  
>> Wife not given maintenance (10 year marriage)  as equity was done  
>> in property distribution.  A couple weeks after CR2A entered, H  
>> traded his 2020 truck for a 2022 truck, increasing debt on vehicle  
>> from $62K to $82K.
>>  
>> During divorce proceeding, H told W he would rather burn the house  
>> down than to give her a penny.  H will how keep the house, ALL  
>> personal property, a small trucking biz he started on the side,  
>> modest 401k of $25K.  Although no one could foresee the housing  
>> decline starting in June 2022,  we believe H took deliberate steps  
>> to increase debt load, with advance plan to file Ch. 13.
>>  
>> Wife, a waitress earning $25K-$30K, will receive nothing if  
>> judgment discharged.
>>  
>> Does wife have any  remedy at all?
>>
>>  Is a deed required to secure a judgment? Does language that  
>> judgment shall be paid from proceeds of sale create a secured  
>> interest?
>> Could either bankruptcy court or superior court entertain the  
>> question of whether the judgment were intended as a form of family  
>> support? 
>>
>>  
>>  
>> andrekita
>> Law Office of F. Andrekita Silva
>> 1325 Fourth Avenue, Suite 2000
>> Seattle, Washington 98101
>> 206-224-8288
>> www.seattle-silvalaw.com[1]
>>  
>>
>>  _
>>
>>       
>>
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Links:
------
[1] http://www.seattle-silvalaw.com/
[2]
[3] http://www.manleyfirm.com
  andrekita
Law Office of F. Andrekita Silva
1325 Fourth Avenue, Suite 2000
Seattle, Washington 98101
206-224-8288
www.seattle-silvalaw.com
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