The worst day ever in bankruptcy court

How do you know that you have just suffered the worst day ever in bankruptcy court? It’s probably when the judge tells you you that despite your bankruptcy filing, you still have to pay your attorney fees to your ex-wife’s divorce lawyer!

That was the sad fate of the debtor in the Johnson case, recently decided by Massachusetts bankruptcy judge Joan Feeney.

Now in a typical divorce case you don’t have to pay the, ahem, “other sides,” lawyer, and in a typical bankruptcy you don’t either. But before filing bankruptcy, the Johnson’s had apparently been before the Massachusetts Probate Court, which ruled that the husband in this case was liable for the wife’s attorney fees.

Judge Feeney, in a highly technical 24 page opinion, essentially ruled that the Probate Court’s ruling survives the bankruptcy because it is a form of DSO.

A DSO is not an orchestra, it is the bankruptcy acronym for “domestic support obligation.” This term came in to the law with the 2005 amendments to the bankruptcy code, and the original and laudable idea was to make sure there were no loopholes in the code that would allow child support to be discharged under any circumstances.

However the definition of DSO has been gradually extended by bankruptcy judges in their opinions, and now it has been stretched in Massachusetts to possibly include an ex-spouse’s divorce lawyer. Divorced debtors beware!

 

By Doug Beaton

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