Can a wife enforce a Virginia divorce decree ordering husband to pay a vehicle loan during his chapter 13 bankruptcy case?

Can a wife enforce a Virginia divorce decree ordering husband to pay a vehicle loan during his chapter 13 bankruptcy case?

Husband and wife were divorced in Virginia in 2006.  The husband and wife were both obligated on a loan secured by a sport utility vehicle.  In the final decree of divorce, the Virginia Circuit Court judge decreed that husband was the sole owner of the sport utility vehicle in his name and that he would be obligated for the payments on the loan secured by the vehicle, except for one monthly payment due immediately prior to the divorce which wife had to pay while wife had possession of the vehicle.  Neither husband nor wife made any payments on the sport utility vehicle loan.  The lender sued husband and wife and obtained a judgment against both parties.

The husband filed a chapter 13 bankruptcy case in the Western District of Virginia, In re Forgette, 379 B.R. 623 (Bankr. W.D. Va. 2007).  The vehicle lender garnished wife’s income or assets.  Wife filed a proof of claim for a priority claim against husband for spousal support, child support and the unpaid judgment, all as a “Domestic Support Obligation”, a term defined in the bankruptcy code in 11 U.S.C. 101(14A).  The vehicle lender also filed a proof of claim for the judgment amount.  The wife filed a Motion for Relief from Stay in husband’s bankruptcy case, asking the bankruptcy judge to allow her to enforce the divorce decree in the Virginia Circuit Court.  The bankruptcy judge denied the wife’s request for relief in her motion.

The bankruptcy judge found that the key issue was whether the obligation to pay the vehicle loan was a “Domestic Support Obligation”.  If the obligation was found to be a Domestic Support Obligation, then husband was not protected by the automatic stay in bankruptcy and wife could pursue husband for the obligation through a show cause proceeding in the Virginia divorce court.  In addition, if the obligation was found to be a Domestic Support Obligation, then husband could not discharge the obligation in his chapter 13 bankruptcy case.  As discussed in the answer to the question herein, “Can my spouse discharge a family law debt in bankruptcy?”, a Domestic Support Obligation has four elements.  In this case, the obligation was missing the first element, it was not “owed to or recoverable by….(i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or (ii) government unit.”  Instead it was owed to a third party, the vehicle lender.  As such, husband’s obligation to pay the vehicle loan was not a Domestic Support Obligation and wife could not pursue husband in the Virginia divorce court.   The bankruptcy judge further ruled that good cause did not exist for relief from the automatic stay because wife did not establish a claim against husband’s estate.

The Forgette opinion is not necessarily the majority view on the issue of whether an obligation owed to a third party is a Domestic Support Obligation.  You should consult with your Virginia bankruptcy or divorce lawyer regarding whether you have a right to pursue your former spouse in his or her bankruptcy case.

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