Submitted on Friday, May 7, 2021
good afternoon everybody it's jeff jenkins and eric clayman here again for our pretty much weekly um facebook live presentation today we're going to talk about uh bankruptcy and and the interplay between bankruptcy and family law and criminal law
and both of those topics can get kind of convoluted complex what else starts with c murky that doesn't begin with the same convoluted complex i'll work on that anyway we're gonna we're we'll kind of keep it simple complicated so um jeff how many times have you gotten a call from a lawyer and we're not even involved in the case and the lawyer says hey you guys know about bankruptcy i'm doing a divorce case and the judge won't let me go forward because someone filed bankruptcy and what's the answer to that i mean you get those questions once in a while the answer is that um the state divorce court uh and the bankruptcy court have in a manner of speaking concurrent jurisdiction over the uh whoever filed the bankruptcy and their property um and we're gonna we're gonna talk about that some but you when you file uh if a bankruptcy is going on and a divorce is filed or vice versa um there are exceptions to the protection provisions of the bankruptcy laws they say that despite the divorce going on there are certain things that the divorce court can do despite the bankruptcy despite the bankruptcy proceeding right exactly and um
one of those would be to establish visitation if there's children or paternity if there's children and dispute about that custody and of course dissolve the marriage itself um so jeff you're saying that somebody gets sued for paternity filing bankruptcy doesn't protect them that's correct okay yeah that's right excuse me but there is some protection provisions um that could be in play but you're right jeff and that's the answer i always give is first of all a divorce if both parties come to the marriage very little and leave the marriage with very little and very few bills and they just want a divorce a bankruptcy really shouldn't even play a part although we receive the calls all the time several calls a year from divorce lawyers who the judge wants to stop at the other side wants to stop it a divorce and as you said a paternity custody visitation all those kind of non-money non-property issues the bankruptcy judge doesn't get in the way of those or not and they congress was clear when it wrote the bankruptcy court yep absolutely these things are very specific in the bankruptcy code so the state court judge who's taking care of the divorce proceeding could certainly go forward with almost everything without talking to the bankruptcy court the only real exception would be property settlement because if you've got one person doing a bankruptcy and they're both in divorce court uh the bankruptcy court would maintain jurisdiction if you will over their property property
and and not only the bankruptcy court but the trustee which whether it's a chapter 13 or chapter 7 might be very interested in what's going on with the property right you could imagine a very convoluted situation in which um the shenanigans going on and the husband has a lot of bills and decides to file bankruptcy and decides to file divorce and the divorce decree says the husband keeps all the bills and the wife gets all the assets and we move on with our lives um those are the type things that it's the shenanigans that the bankruptcy court the bankruptcy trustees want to take a good look at before um some of the property settlement can go forward yeah but i think i think eric they want to certainly um want to make sure that the property settlement's fair and equitable as far as the creditors are concerned and you were positing a situation where you know the creditors just kind of got cut out of this thing and the wife walks away with everything or the husband does whatever you're doing right that's what they're there to protect so basically um we see it a lot because money problems and family problems are suppressed not surprisingly um there's there's a relationship look if you have a lot of money perhaps it's easier to be happy all the time or if you can't pay your bills perhaps it's a little hard to be happy all the time when you're not at happy spouse happy life and um sometimes at least so we see this a lot talk to us other lawyers call us um people who aren't our clients call us because this question comes up and in southern uh new jersey we're known as bankruptcy lawyers who can give you the answer to this exactly in fact if you have a question about this or any other type of interplay between divorce and bankruptcy you're just you're having problems or you have a colleague friend or co-worker who are having a tough time paying their bills right now the phone calls right on the screen give us a call when you call ask for jeff's book it's our pleasure to give you jeff's book and there it is it's um make bankruptcy work for you and it does have a little bit in here about the divorce laws and how they interplay with bankruptcy but it really gives you some good fundamental background on uh bankruptcy law and how we can help you uh the other thing i can recommend is our website is new and improved jenkinsclayman.com if you want you can go back there's a video section we have several of these videos you can just kind of go through them they're they're listed by topic and if there's a particular issue bothering you a friend a colleague a co-worker you're behind with your right you're behind with income taxes behind with credit cards these are the most common when people call us um just look at the video give us a call ask for the book and uh knowledge is power jeff i've got a question for you yeah and this comes up and sometimes it's uncomfortable because they're friends of ours and colleagues but in a divorce or in a family law dispute if the person it incurs attorneys fees and they're unpaid can they be discharged legally forgiven in a bankruptcy proceeding yeah the person who's filing the bankruptcy is the one who incurred the attorney's fees as part of the divorce proceedings um that's just another unsecured debt as far as the bankruptcy court is concerned so just like a credit card medical bill it uh can be erased and that's that's tough you know if a divorce lawyer calls us up and says i've got a referral for you
now on the other hand if as part of the divorce proceeding that the judge the state court judge tells one of the parties that they have to pay the other party's attorney's fees those are generally seen as of the nature of maintenance alimony or support and so just like those things you can't get rid of in bankruptcy no matter what kind of bankruptcy you do um you you could get rid of those attorneys fees and that's you know important to keep in mind another thing eric that we we see sometimes or get questions about their clients come in and they think that they got a bad deal in the divorce and the bankruptcy can do something about it and the bankruptcy court is not an appellate court it's not it's not going to reverse the decision of a state court judge for in a divorce matter or quite frankly in any dispute where there's a final order and we see that we see sometimes people get sued two neighbors sue each other and um it's fraud or some bad determination and the defendant who lost in court comes to see us now the debt itself can be treated in a bankruptcy court by the bankruptcy require bankruptcy laws but if there was a determination in the state court a final judgment the amount of the judgment or the nature of the judgment will not be disturbed by a bankruptcy court although interestingly and i know we're going off topic the state court does have a different definition of fraud at times like that in the bankruptcy court and we know that bankruptcy court fraud is not forgivable sometimes state court fraud does not fit the debit definition yeah yeah we don't want to belabor it but that's true that fraud in the state court is not necessarily fraud in the bankruptcy court and debts incurred where there's fraud involved are going to be non-dischargeable whether it's a chapter 7 or a chapter 13. that was one of the changes they made in 2005 they made um it used to be that fraud was dischargeable in chapter 13 the last 16 years it hasn't been um but the the way the bankruptcy court looks at things and the definitions they have to follow of what fraudulent behavior is would be different from a state court proceeding and so just because there's a judgment against somebody in state court that says there was fraud involved that doesn't mean that the bankruptcy judge is going to agree with that part of it anyway they're not going to return the judgment but in the bankruptcy they will not pay attention to the fraud and allow the debt to get discharged this is what jeff and i do all the time he comes in my office this is my office he asked me a question about family law and all of a sudden i pushed us to talk about fraud but um they're related in a way i guess the point that jeff was making it first is still the point which is the bankruptcy court is not an appellate court right there's just sometimes different definitions that's why you need to call an experienced bankruptcy lawyer whenever you have financial issues um a colleague of yours a co-worker a friend a relative call us we can go over this and what seems obvious sometimes is less than obvious and jeff in addition to the many calls we get from people going through divorce or family disciplinary marriage dissolution issues we also get a lot of people who have slight issues with the law up to big issues with the law and we get calls and there's a lot of different types of debt that involved criminal law or municipal court as we call it new jersey sometimes municipal court and criminal law there's a lot to learn a lot to know about how they're treated in a bankruptcy case should we finish up with our family i thought we were finished i think we're finished it's ten minutes go ahead would you like to say all right um if if you're in a bankruptcy and you owe maintenance out money or support that's something that's not dischargeable we mentioned that before but um the your tax refund can still be garnished despite the bankruptcy proceeding and your wages can still be garnished to pay maintenance report despite the bankruptcy proceedings so those are exceptions to the protections that bankruptcy uh norm would offer someone um right we can expand on that because when people see us and they have a wage garnishment in favor of someone who sued them or even the irs has a wage garnishment against them which happens a lot yeah we stop those wage garnishments right away that's what bankruptcy funding does that's not a problem however what jeff was saying if it's child support and it's a wage garnishment um there's very little we can do yeah there's another thing that a lot of states have certainly new jersey does and that is if you're not paying your child support maintenance alimony or child support licenses can be revoked and not just your driver's license could have a license to be a plumber or a barber yeah whatever even an attorney at law i guess so that's kind of also another exception to the protections the bankruptcy affords it doesn't protect you from that um if you and this is this another thing that i'd like to point out this is important and probably of all the things we're saying it's something that
should stick in your mind that is if you do a chapter 7 you can't get rid of any property settlement things there's a party settlement as part as part of the divorce proceeding whatever it says if you do a chapter 7 you can't alter it in chapter 13 however you can property settlement debts are dischargeable just like a medical bill credit card unless like i was talking about before the um the property distribution can somehow be seen as of the nature of maintenance alimony or support and there's times when it can but that's that's a very important distinction and a lot of times it might dictate what kind of bankruptcy we do you know whether we're going to do it chapter 7 or chapter 13. um we have anything else about the family stuff i see i'm i'm in the penalty box for skipping to criminal law already i think we gave people a good background again you can give us a call and just ask for jeff's bulk get a little bit more information on this and um you know we're here to help and just call us for questions there's no obligation so if we if you have a particular marriage dissolution support family law issue that deals and you're having problems paying your bills give us a call we'll we'll be able to talk to you yeah absolutely um what else i wanted to talk about people who drive and they get stopped by the police okay and then they owe a lot of money and they can't pay it yes well um and we're going to talk about that in chapter 7 one of the things that's or one of the paragraphs that talks about things that you can't get rid of are fines penalties or forfeitures you can't get rid of those in chapter seven and in chapter 13 you can get rid of them but you can't get rid of a criminal fine or restitution based on a criminal proceeding
so it's fines that a municipal court would dole out are generally not seen as criminal fines but there are other fines in larger courts that would be
that doesn't mean that we've taken we can take all the teeth away from a municipal court so based on what jeff said if you do a chapter 7 to get rid of your credit cards and medical bills we include the municipal court on the list of creditors so they're aware you're having financial problems and what we recommend is you then call the municipal court make payment arrangements assuming that the fine is there because and you've already pled guilty of course of course if it's for failure to appear call our office because it's it's complicated almost nothing that i am going to be speaking about deals with failure to appear okay but assuming that there's a fine against you uh municipal driving time for instance um a chapter seven won't get rid of it but we have found that if you otherwise wish to do a chapter seven we can help you get a payment arrangement with the municipal court and because you don't owe anybody else any money you're in better position to pay the municipal court and move on and move on with your life now chapter 13 the payment type bankruptcy we have a lot more flexibility in fact in um pretty much in all of new jersey or just about wherever we deal now because we've been doing this so long we've worked it out that the municipal courts accept the chapter 13 as a bona fide payment plan and we'll set aside a driver's license suspension based on failure to pay a fine we've had great success with that but then you have to pay it back because we don't want the municipal courts to impose what they call alternative penalties which they can do in new jersey and that's that's something that uh we don't want to happen because an alternate penalty might be jail time you know they might the judge might say hey mr smith i don't care about that fine anymore you're going to jail for a certain number of days and we can't stop that that's a it's a criminal proceeding and that's kind of a tenant of bankruptcy law eric you know if um if it's a criminal matter a real criminal matter the bankruptcy can't do anything with it generally but uh civil matters it can that's exactly right now jeff the state found a good way to raise more money 20 or 30 years ago because it felt like who would object to charging people who commit criminal uh traffic fines who would object to charging them even more money because you can't a voter can say hey i'm a bad driver so i'm against this so the politicians passed this law the new jersey surcharge law and that basically says if you've gotten fined yo this not only do you owe the municipal court so here in audubon you're stopped for speeding we see this right in front of our office all the time on the white horse pike and if it's a bad enough speeding fine not only do you autobot after you plead guilty or found guilty you then owe the state of new jersey motor vehicle services formerly division of motor vehicles what's called a surcharge and that is that a fine penalty or fortune feature well that's a good question the only judges that have uh tackled that question in new jersey and maybe well i don't think pennsylvania has surcharges so it's written so it's only been bankruptcy judges bankruptcy judges that have addressed this it's never gone to a federal district court judge or third circuit court of appeals and there is no law of the district so whatever a bankruptcy judge says is not binding on all the other bankruptcy judges um or binding in the district and and uh it's i've seen some long opinions about that you know with the judges struggling with are these surcharges a fine penalty or forfeiture because if they are then we can get rid of them in chapter 13. if but we couldn't get rid of them in a chapter seven and it seems that what i've found that i've seen anyway it's kind of like the last opinion by a bankruptcy judge is what the uh motor vehicle folks follow you know so if the judge says you can get rhythm in chapter seven that's the way it is in new jersey for a while until a judge comes along and changes and says but as of uh may 2021 if you do not own real estate have been getting discharges in chapter seven for surcharges yes of course if you're listening to this in june 2021 give us a call and that was jeff's point um and chapter 13 we certainly are getting rid of surcharges again if you own real estate it's something we have to look at a little bit with a little bit more detail but for those of you who are less familiar and i've been joking about the surcharges a bit if you're stopped for drunk driving and you lose your license for six months it's tough to maintain employment you pay a lawyer a lot of money you pay a municipal court a lot of money sometimes you lose your job because you can't drive anymore and then you owe surcharges of typically i don't know one to two thousand dollars a year for three years at six thousand dollars sometimes it's more so it's really a significant debt i don't think anyone files bankruptcy just because they owe three thousand dollars but what happens is it's really um it's a straw that can break a delicate camel's back and we do see people who owe surcharges and it's not their only debt i there's a statistic jeff i think over 90 of people consumers who file bankruptcy owe medical bills right and you hear that you think oh my goodness the medical bills are crushing the economy well it doesn't mean that everybody filed bankruptcy ninety percent filed because of medical bills right and this similar to surcharges most of our clients don't file just because of surcharges but it's a bill that we can get rid of and jeff new jersey as a hammer to collect surcharges can suspend licenses for not paying surcharges as well that's exactly right and many of our clients come in here in fact with their license suspended because they haven't paid for charges and every once in a while we might get a client i think we have one or a client send not last week but the week before maybe who had a lot of search arches and a lot of fines maybe more than ten thousand dollars of each so we do see that from time to time and we can help people if you've been stopped for drunk driving and you have a six-month suspension but you didn't pay your surcharges and you've done the six months you've paid your municipal court fine you've paid 150 to motor vehicles for restoration but you can't get your license back just because of surcharges we can get your license back in a week typically i mean that quickly they're very good motor vehicle people are very responsive to us when we call them up and tell them you've got somebody who filed a bankruptcy and a license is refund they'll reinstate it right away and so that's uh that's good news jeff i was too enthusiastic today i think why i'm going over the timeline oh we're doing good i guess i think it's about time to sign off um so it was good talking to you again and uh next yeah next week we won't be doing this because i'll be someplace else but the following week on thursday at two o'clock we'll have the same facebook live presentation with a different topic so until then everybody stay safe and god bless