Douglas C. Sutphin was probably one happy guy when he learned his ex-wife declared bankruptcy and received a Chapter 7 discharge.
Sutphin figured that her divorce lawyer’s bill, the one he was supposed to be paying but so far hadn’t, was gone with the wind.
But after her bankruptcy discharge, Sutphin’s ex went back to court and obtained an order requiring him to pay the $23,000 bill in three installments. Sutphin went to the Court of Appeals and argued that he wasn’t responsible for her legal bill because it had been discharged in bankruptcy.
There are a few problems with your argument, Mr. Sutphin, said COA Judges Kathleen Jansen and Elizabeth L. Gleicher in the majority opinion of Berryman v. Sutphine.
First, it’s not at all clear that your ex-wife’s legal bill was discharged:
Defendant has presented no evidence substantiating (1) that plaintiff listed or scheduled her divorce attorney debt, or (2) the extent of plaintiff’s divorce attorney’s notice or knowledge of the right to assert a claim in plaintiff’s Chapter 7 case.
Second, if you yourself sought a bankruptcy discharge of the judgment requiring you to pay the attorney fees, you couldn’t do it:
[T]he current bankruptcy code prohibits the Chapter 7 discharge of a divorce-related attorney fee obligation. Depending on the underlying circumstances and the precise language of a divorce court’s attorney fee award, federal courts deem a divorcing party’s attorney fee debt as nondischargeable in a Chapter 7 bankruptcy under either 11 USC 523(a)(5) or (15).
But the real stopper is this:
Even were we to assume for the sake of argument that plaintiff’s Chapter 7 discharge eliminated the debt she owed to her divorce attorney, defendant ignores that plaintiff’s discharge has no legal impact on the distinct attorney fee debt that defendant owed to plaintiff, arising from the circuit court’s … orders.
In a concurring opinion, Judge Christopher M. Murray noted that:
[A] “Chapter 7 discharge does not actually extinguish a debtors debts; however, he is no longer personally liable for the discharged debts.” In re Graham, 297 BR 695, 697 (Bankr ED Tenn, 2003) … .
Thus, even if plaintiff’s debt to her attorney was discharged in the Chapter 7 proceeding, that did not eliminate the actual debt that existed to the attorney.
Therefore, the circuit court was free to determine that defendant should pay the outstanding attorney fees, as long as that decision was supportable under the normal rules governing the award of attorney fees in divorce actions. Since it was, defendant’s argument is properly rejected.
Murray said the only thing missing from the majority opinion was a directive that Sutphin should make the payments directly to the ex-wife’s attorney.
It’s only right. He’s the guy with the unpaid bill.