Authorized case study: contempt of court
The following is an illustration of the interplay of bankruptcy and divorce law based on real cases in the Circuit Court of Chesterfield County and the Eastern District of Virginia, Richmond Division, Bankruptcy Court, published without names with the client’s authorization.
Husband hired me to represent him in a divorce case in which he had been summoned to show cause why he should not be held in contempt of court for failing to comply with an order of the divorce court. The order required him to pay the mortgage, utilities and keep his wife and child insured under his health insurance policy. Husband had not been able to pay the mortgage and was facing a foreclosure sale of the marital residence.
The order had been presented to the court by the wife’s attorney and was entered by the divorce court at the same time Husband’s previous attorney withdrew from the case. Neither the Husband nor his previous attorney had signed the order. Husband did not attend the hearing when the order was presented to the court. The order incorporated a court reporter’s transcript of a deposition at which the parties had discussed the terms of a separation agreement that the wife’s attorney stated she would later prepare for the parties to sign.
In Virginia divorce cases, a court can incorporate into a decree an agreement between the husband and wife. To be enforceable, the separation agreement, also known as a marital agreement or a property settlement agreement, must be in writing signed by the husband and wife, or contained in a court order signed by the parties or recorded and transcribed by a court reporter and affirmed by the parties on the record personally. In this case, wife’s attorney claimed that the deposition transcript was an agreement between the parties.
Husband decided to file a chapter 13 bankruptcy case to save the marital residence from foreclosure. At the same time, we filed a motion to set aside the order incorporating the alleged agreement between the parties. The divorce court judge postponed a decision on our motion and continued the contempt hearing to allow for the progression of the bankruptcy case. The case was set for a final hearing several months later on the grounds for divorce, support, child custody and child support, and equitable distribution.
Wife filed an objection to Husband’s chapter 13 case, which was overruled by the bankruptcy court judge. Wife filed a proof of claim in the bankruptcy case. We objected to Wife’s proof of claim and the bankruptcy court disallowed it. Husband sought and obtained relief from the automatic stay to continue his Virginia divorce case. Husband’s chapter 13 plan was confirmed by the bankruptcy court.
A full hearing was held on all matters related to the divorce case and counsel submitted memoranda of law following the hearing. Husband lost his job a month later and used his legal right to voluntarily dismiss his chapter 13 bankruptcy case. Wife’s attorney again scheduled the case for a contempt hearing, claiming that Husband was in violation of the court order incorporating the alleged agreement of the parties.
Six months after Husband hired me, the court set aside the order incorporating the alleged agreement between the parties, holding that the Wife’s counsels representations that she would prepare a written agreement created a condition precedent to the formation of a contract between the parties. Husband’s use of a motion to set aside the order and his chapter 13 bankruptcy protected him from being held in contempt of court for violating the invalid order submitted by Wife’s attorney.
You should consult with your bankruptcy or divorce attorney to determine whether a bankruptcy would serve your best interests during a divorce case