Must a wife file an adversary proceeding in husband’s chapter 7 bankruptcy case in Virginia to determine the nondischargeability of spousal support and an indemnification for husband’s share of marital debt?
Not all debts can be discharged in bankruptcy. Section 523 of Title 11, the Bankruptcy Code, lists certain exceptions to discharge, also referred to as nondischargeable debts. http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t09t12+3806+0++%28%29%20%20AND%20%28%2811%29%20ADJ%20USC%29%3ACITE%20AND%20%28USC%20w%2F10%20%28523%29%29%3ACITE%20%20%20%20%20%20%20%20%20 . The two family law exceptions to discharge are Section 523(a)(5) and 523(a)(15). Section 523(a)(5) creates an exception for domestic support obligations. A domestic support obligation is defined in Section 101(14A) as a debt before, during, or after the bankruptcy, including interest, (1) that is owed to or recoverable by a spouse, former spouse or child of the debtor, or the parent, legal guardian or responsible relative of a child of the debtor, or a governmental unit, (2) which debt is in the nature of alimony, maintenance or support, regardless of how it is designated, (3) which debt is established or subject to be established by a divorce decree, separation agreement, or property settlement agreement, an order of a court of record, or a determination by a governmental unit, and (4) which debt has not been assigned to a nongovernmental unit, unless it was voluntarily assigned by the payee for collection. http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00000101—-000-.html .
Section 523(a)(15) excepts from discharge a debt owed to a spouse, former spouse, or child of the debtor, which debt is not a domestic support obligation, that is incurred by the debtor during separation or divorce, or by a separation agreement or an order of a court of record or a determination by a governmental unit. A Section 523(a)(15) debt may take the form of an original promise to pay a joint or marital debt with an agreement to indemnify or hold the other spouse harmless from potential liability. In an equitable distribution proceeding incident to a divorce in Virginia, the judge may allocate marital debt to a husband or wife, which debt could then fall under Section 523(a)(15). Although the debtor spouse may discharge his or her obligation to the creditor in bankruptcy, the other spouse or ex-spouse may have recourse against the debtor for his or her remaining liability to the creditor. As discussed in answer to the question, “Can my spouse discharge a family law debt in bankruptcy?” http://bankruptcydivorceblawg.com/?page_id=23 , a debt under 523(a)(15) may be discharged in a chapter 13 case, but not in a chapter 7 case. If a family-law debt based on a Virginia court order is discharged, the other spouse or ex-spouse should discuss with his or her attorney whether the debtor spouse may still be held in contempt of court for a violation of the underlying court order.
Either the debtor or a creditor may file a complaint in the U.S. Bankruptcy Court to obtain a determination of the dischargeability of any debt under Bankruptcy Rule 4007. http://www.law.cornell.edu/rules/frbp/rules.htm#Rule4007 . Certain debts will be discharged unless the creditor files an adversary proceeding requesting a determination of dischargeability within sixty (60) days after the date first set for the meeting of creditors. These debts are identified in Sections 523(c) and 523(a)(2), (4) and (6) and include debts based on false pretense, false representation, actual fraud, use of a false financial statement in writing, fraud or defalcation while acting as a fiduciary, embezzlement, larceny, and willful and malicious injury by the debtor to another person or entity or the property of another entity. It is not necessary for a spouse to file a complaint objecting to the dischargeability of a family law debt, either a Section 523(a)(5) domestic support obligation or a Section 523(a)(15) debt related to separation or divorce within any particular time period. In Virginia, either the appropriate city or county circuit court or the U.S. Bankruptcy Court for the Eastern District of Virginia would have jurisdiction to hear a complaint under Sections 523(a)(5) or (15).
You should consult with your Virginia bankruptcy or family law lawyer to discuss whether a particular family law debt is dischargeable in bankruptcy.