Monday, December 28, 2009

Court Lacks Discretion to Balance Hardship of Property Division Debt

Here is an interesting case regarding the limit of the court's discretion to reduce the hardship imposed upon the paying spouse and thereby reduce the proceeds received by the receiving spouse.

In re Blackburn, 412 B.R. 710 (Bankr. W.D. Pa 2009). A chapter 7 debtor's ex-wife objected to the discharge of her claim pursuant to Section 523(a)(5) and (a)(15). Because it was clear that the obligation was incurred in connection with a divorce decree, the court ruled that the claim was nondischargeable. The debtor asked the court to reconsider, arguing that the court had discretion to find the debt to be dischargeable. The debtor said he was 50 years old and physically unable to work. He asserted that payment of the debt to his ex-wife would cause him to suffer a substantial hardship. Nevertheless, the court denied the debtor's request for reconsideration, noting that the bankruptcy courts no longer have discretion to allow the discharge of matrimonial obligations in chapter 7 cases.

Warmest Regards,

Bob Schaller

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