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Bankruptcy and Lawyers fees



#2
Arizona

I was ordered to pay my child's other parents legal fees in family court. Can this be written off in bankruptcy so I do not have to pay it?
In general that is a debt that would be eligible for discharge in a Chapter 7 bankruptcy. Discharge means that you no longer have any personal liability for the debt. But note that bankruptcy does not automatically get rid of any liens on property that may exist for the debt. See a bankruptcy lawyer for advice on what you may achieve if you file bankruptcy given your particular circumstances. Those circumstances make a difference.
 
#3
Okay because I was told that due to it being related to family court/child support case that I could no longer include it in bankruptcy. That the law was changed in AZ recently for family court judgements because that money frees up the parents income and allows for support of the child.
 

adjusterjack

It's a Dry Heat
#4
T-M, wouldn't it be an exception to discharge?

(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
 
#5
Arizona

I was ordered to pay my child's other parents legal fees in family court. Can this be written off in bankruptcy so I do not have to pay it?
The obligation to pay the legal fees looks to be in the nature of support. If it falls under 11 USC 523(a)(5) it is non-dischargeable in any bankruptcy. If you are going to allege that such payment is not in the nature of support then it may fall under 11 USC 523(a)(15) which, if you file a Chapter 7 will likewise be non-dischargeable.

The only Chapter that may assist is a Chapter 13 but do not hold your breath:

For Chapter 13 purposes and from the 2016 unpublished opinion of Gately v. Moore (In re Gately) (B.A.P. 9th Cir., 2016)

Section 523(a)(5) excepts from discharge a debt for a "domestic support obligation." In relevant part, that term is defined by the Code as a debt "owed to or recoverable by (a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative) . . . in the nature of alimony, maintenance, or support . . .". . .by "reason of (an order of the court of record) . . . ,and "without regard to whether such debt is expressly so designated . . . ." 11 U.S.C. § 101(14A)(A)-(C)(i). The debt cannot be "assigned to a nongovernmental entity," unless voluntarily assigned by a statutorily designated person. Id. § 101(14A)(D). . .

An award of attorney's fees (in the family law) proceeding may be in the nature of a domestic support obligation for the purposes of §§ 523(a)(5) and 101(14A).5 See Gionis v. Wayne (In re Gionis), 170 B.R. 675, 682-84 (9th Cir. BAP 1994), aff'd, 92 F.3d 1192 (9th Cir. 1996); see also Rehkow v. Lewis (In re Rehkow), 2006 WL 6811011, at *3 (9th Cir. BAP Aug. 17, 2006)("Cases in the Ninth Circuit and in other circuits customarily have held that attorneys' fees awarded in connection with a dissolution proceeding are non-dischargeable in bankruptcy under § 523(a)(5) as alimony, maintenance, or support."), aff'd, 239 F. App'x 341, 342 (9th Cir. 2007) ("Attorneys' fees . . . fall within the exception for discharge for support obligations.").

Labels in a divorce decree do not control the question of whether a fee award constitutes a domestic support obligation. See In re Gionis, 170 B.R. at 682. Instead, the bankruptcy court "must look behind the state court's award and make a factual inquiry to determine whether the award is actually in the nature of support." Id. at 681.
So, if you file a 7 you will be stuck. If you file a 13 you could ask the judge to find that payment was not in the nature of support. However, since the fees were incured in either a custody or child support argument my guess is you have a very uphill battle.

Des.
 

latigo

Senior Member
#6
The obligation to pay the legal fees looks to be in the nature of support. If it falls under 11 USC 523(a)(5) it is non-dischargeable in any bankruptcy. If you are going to allege that such payment is not in the nature of support then it may fall under 11 USC 523(a)(15) which, if you file a Chapter 7 will likewise be non-dischargeable.

The only Chapter that may assist is a Chapter 13 but do not hold your breath:

For Chapter 13 purposes and from the 2016 unpublished opinion of Gately v. Moore (In re Gately) (B.A.P. 9th Cir., 2016)



So, if you file a 7 you will be stuck. If you file a 13 you could ask the judge to find that payment was not in the nature of support. However, since the fees were incured [sic] in either a custody or child support argument my guess is you have a very uphill battle.
Des.
Characterizing an award of attorney fees as being in the nature of support and thus non dischargeable is not limited to awards made in connection with child custody or child support or spousal support litigation. Even in matrimonial cases not involving financial support of dependents, such awards have been found to be in the nature of support and non dischargeable when awarded to a spouse who would not otherwise be able to litigate.

In other words, although to be non dischargeable the fees must in the nature of support yet not necessarily incurred in litigating support. (In re Newman, 196 B. R. 700 (E.D.N.Y. l994); In re Silberfein, 138 B. R. 407 (S, D. N. Y. 1985)

It is also worthy of noting that the Bankruptcy Code starts with the presumption that all debts are dischargeable. The burden of overcoming the presumption by a preponderance of the evidence rests with the party opposing the discharge. And that all objections to discharge are strictly construed against the creditor and in favor of the debtor. ( Grogan v. Garner, 498 U.S. 279 (1991); In re Frey, 212 B.R. 728 (Bankr. N.D.N.Y. 1996); In re Rosen, 169 B.R. 512. (In re Hanna, 197 B.R. 413 (Bankr. E.D.N.Y. 1996); In re Bodenstein, 168 B.R. 23 (Bankr. E.D.N.Y. 1994).
 
#7
T-M, wouldn't it be an exception to discharge?
If, in fact, the award of fees is in the nature of support. But legal fees do not automatically qualify as being in the nature of support, even in connection with a family law case. Certainly they have been treated as in the nature of support, as both latigo and despritfreya pointed out in explanations much better written than mine, but nevertheless not all of them so qualify. Thus, you have to look at the specific circumstances of the award. That is why I told the OP to consult a bankruptcy lawyer to look at the award in his/her case to determine whether it would be dischargeable. The details matter.