A separate and otherwise enforceable obligation to one's former spouse under a separation agreement or a divorce decree to make payments on third-party debt is not dischargeable in Chapter 7 bankruptcy.
Under a trial court's divorce decree, a husband was obligated to pay the bank loan on a repossessed vehicle, which had been determined to be a marital debt. Subsequently, the husband received a post-decree Chapter 7 bankruptcy discharge but the wife failed to institute an adversary proceeding in bankruptcy court. The trial court found the husband to be in contempt for failure to pay the debt on the repossessed vehicle. The trial court also denied the husband's motion to modify child support, stating that no new facts had been adduced on this issue following entry of the decree in which he was found to be question as to whether the husband's obligation under the divorce decree was a debt to his wife. If the obligation to make payments on the bank loan on the repossessed vehicle met the requirements of 11 U.S.C.S. § 523(a)(15) as a debt under the divorce decree, then the wife was correct that she was not required to file anything in bankruptcy court in order later to obtain enforcement of the husband's obligation to her under the divorce decree in state court.
Did a state trial court have the authority to enforce a husband's obligation to pay a marital debt under divorce decree through contempt proceedings?
The court affirmed, concluding that the wife was not required to file anything in bankruptcy court regarding the husband's Chapter 7 bankruptcy filing in order to preserve her right to enforcement in state court of the husband's obligation to her under the divorce decree. While the obligation on an underlying debt to a third-party creditor could be discharged because that underlying debt was not to a spouse or former spouse or child, a separate and otherwise enforceable obligation to one's former spouse under a separation agreement or a divorce decree to make payments on third-party debt was not dischargeable in Chapter 7 bankruptcy.