Source: https://familylaw.typepad.com/virginiafamilylawappeals/bankruptcy/
Timestamp: 2019-04-25 06:37:31+00:00

Document:
PROPERTY DIVISION – DEBT – MARITAL OR SEPARATE – VERY SERIOUS PAYROLL TAXES ARREARAGE. The Supreme Court made it sound so incredibly simple, straightforward and obvious – self-evident, really. It makes perfect sense. Of course you can’t treat debt in equitable distribution just like it was property. The wording of § 20-107.3 says a whole lot about exactly how a judge is authorized to divide marital property interests, with the Factors and all, and then when it speaks of debt it doesn’t say all that stuff, but says something very short and therefore, of course, different. So thus by negative implication, the Supreme Court explained in Gilliam v. McGrady, ___ Va. App. ___, ___ S.E.2d ___, 24 VLW 1237 (4/15/10), debt can’t even be classified as marital or separate except by title, after which the spouse who doesn’t want all that debt but wants some of it shoved off to the other, and who has the burden of proof to do so, comes in and shows evidence for its allocation. But oddly enough, the Court of Appeals and trial court hadn’t seen it that way but in a way equally simple but just the opposite. The Court of Appeals has long assumed, and said, that debt is just one more kind of property: negative property, and it can be apportioned just like everything else. The Supreme Court rejects that out of hand, and in the course of doing so says some very interesting things. Once again this is one of those cases where it is best to let the Court speak for itself, in the following selected quotations.
The equitable distribution statute contains no provisions creating a presumption of allocating a burden of proof with regard to the apportionment of debts between spouses. … In framing Code § 20-107.3, the General Assembly clearly knew how to create a presumption and allocate the burden of proof, having explicitly done just that with respect to assets, in enacting subsection (A)(2). For policy reasons that can be well imagined, the General Assembly chose to omit parallel provisions with respect to debts, giving to the courts only the general guidance contained in subsection (E)(7) and (11), quoted above. … Instead, traditional rules concerning the allocation of the burden of proof apply.
Marvin v. Marvin: BANKRUPTCY – DISCHARGEABILITY OF FEE AWARD IN VISITATION-ORDER-VIOLATION CASE.
Everybody knows, or should know, that payments due to a mother “in the nature of child support” are not dischargeable in bankruptcy, and most divorce lawyers probably know that quite a number of courts have interpreted that to include fee awards obtained by support recipients in cases concerning child support. But what about fees awarded against a husband who was found in contempt for being out of communication, and keeping the child beyond the pickup time and thus causing her to miss a day of school? Is the Court of Appeals stretching a point to call this support-related?
Bankruptcy: Effect on Property Division: In Re Ferrebee.
(No. 90-22926-T, U.S.B.C. at Norfolk), 6 VLW 224. The United States Bankruptcy Court for the Eastern Division of Virginia held that the agreement between the debtor husband and his former wife in their separation agreement to hold one another harmless for the debts each had assumed is non-dischargeable in bankruptcy, because it is "in the nature of alimony." The Court found it clear that the parties intended this mutual hold-harmless obligation to be non-dischargeable, and their agreement can be said to have characterized the obligation as one of maintenance. Though these characterizations in agreements are not necessarily dispositive, this one certainly is.
PROPERTY DIVISION – ASSUMPTION OF DEBT – PREDICTED BANKRUPTCY DISCHARGE OF OBLIGATION ALREADY BARGAINED FOR IN E.D. SETTLEMENT – LIABILITY OF NON-BANKRUPT SPOUSE – ALIMONY AWARD AS REMEDY – SPECULATIVE.
After some Virginia appellate opinions approving belated alimony as a remedy when the other spouse defaults on an obligation to cover a marital debt assumed in exchange for some quid pro quo in a separation agreement, most Virginia practitioners assumed they knew just what to do when a bankruptcy discharge of that same assumed obligation is then sought: go immediately into court to seek a belated spousal support award as a remedy. But they would all be wrong, according to the recent opinion of the Court of Appeals in Rogers v. Rogers, 51 Va. App. 261, 656 S.E.2d 436, 22 VLW 1082 (2/12/08). What’s wrong with it now? If the husband (as it was in this case) has not yet actually received a discharge of the debt, then it would be speculative to assume he would get it – even though the debt specifically assumed by and assigned to him has still never been paid, bankruptcy has been filed for, and that debt specifically listed by the debtor.
BANKRUPTCY -- Effect on Property Division.
In Re Ferrebee (No. 90-22926-T, U.S.B.C. at Norfolk), 6 VLW 224, the United States Bankruptcy Court for the Eastern Division of Virginia held that the agreement between the debtor husband and his former wife in their separation agreement to hold one another harmless for the debts each had assumed is non-dischargeable in bankruptcy, because it is "in the nature of alimony." The Court found it clear that the parties intended this mutual hold-harmless obligation to be non-dischargeable, and their agreement can be said to have characterized the obligation as one of maintenance. Though these characterizations in agreements are not necessarily dispositive, this one certainly is.
The Virginia Court of Appeals in Douglas v. Douglas, ___ Va. App. ___, 437 S.E.2d 444, 8 VLW 673 (11/23/93), stopped a husband from using bankruptcy to escape the debt-apportionment obligations of a separation agreement.
CREDITORS' RIGHTS — JUDGMENTS — ENTIRETIES PROPERTY.
A creditor still can't reach tenants by the entirety real estate, even if it has a judgment against each of the spouses, the Virginia Supreme Court explained in Rogers v. Rogers, ___ Va. ___, ___ S.E.2d ___, 13 VLW 1160 (2/26/99). What the creditor has to have is a joint judgment against the husband and wife jointly as ten-ants by the entirety with right of survivor-ship if it is going to satisfy that judgment against that property which is titled that way. In this case, where the separate judgments were against husband and against wife, arising out of a joint fraudulent scheme, the creditor had argued that the Supreme Court should "expand" Price v. Hawkins, 247 Va. 32 (1994) to create a remedy and force a sale of the real estate, but the Supreme Court declined that invitation.

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