In re Golan, ___BR___ (Bankr. E.D.N.Y. Dec. 19, 2019), E.D.N.Y case #19-75598
In re Golan, ___BR___ (Bankr. E.D.N.Y. Dec. 19, 2019), E.D.N.Y case #19-75598: Bankruptcy Court decision holds that it did not violate the bankruptcy automatic stay for the state court to hold a contempt hearing, in a divorce suit, after the debtor filed bankruptcy, because the bankruptcy debtor failed to pay a $20,000 sanction to wife’s attorney, in divorce suit, which the state court had ordered the bankruptcy debtor to pay to wife’s divorce attorney. There was no stay violation for the state court to hold the contempt hearing, because the contempt hearing was criminal contempt, and 11 USC 362(b)(1) stay exception excepts criminal matters from being stayed by the bankruptcy automatic stay. The outcome of the criminal contempt hearing was that the state court ordered the bankruptcy debtor put in jail, until the bankruptcy debtor paid the $20,000 to the wife’s divorce attorney. The Bankruptcy Court held that putting the debtor in jail as punishment for criminal contempt would not have been a stay violation, due to the same 11 USC 362(b)(1) stay exception for criminal matters. However, the Bankruptcy Court held that putting debtor in jail, to try to coerce debtor into paying $20,000 to the wife’s divorce attorney, did violate the bankruptcy automatic stay, because that was a prepetition debt, and it was unclear whether the state court order was seeking to have that debt paid from bankruptcy estate funds, or from postpetition earnings of debtor. Because divorce “domestic support payments” are automatically nondischargeable, pursuant to 11 USC 523(a)(5), it would not have been a stay violation to seek to collect the $20,000 form debtor’s postpetition earnings.