Friday, March 6, 2009

Indiana Decision: Divorce and Bankruptcy

From The Indiana Lawyer comes Judges disagree on if remand is necessary:

"The Indiana Court of Appeals reversed and remanded a trial court's grant of an ex-wife's petition for additional relief for funds, finding the trial court didn't hear evidence on certain 'critical' factors. The judges on appeal didn't agree as to whether the case should be remanded."


In Harold E. Bean Jr. v. Carol A. Bean, No. 49A05-0807-CV-390, the appellate court considered whether the trial court properly adjudicated certain of Harold Bean's dissolution debts to be nondischargeable for the purpose of the federal bankruptcy proceedings; whether the trial court erred in ordering him to pay half of the Beans' children's college expenses; and whether it erred in ordering Harold to pay Carol Bean's attorney fees.


When considering whether Harold's dissolution debts, such as the second mortgage and tax liability were nondischargeable, the Indiana Court of Appeals noted important evidence on certain factors was missing. The record didn't contain evidence of their incomes and earning potentials when they entered the settlement agreement, and neither party presented evidence about the actual need for support or the adequacy of support without the award, wrote Judge Elaine Brown.

Without a record of the parties' financial situations when they entered into the settlement agreement, the Court of Appeals was unable to tell whether the second mortgage assigned to Harold was intended to be in nature of maintenance or support or part of a property division, which would determine whether the debts were nondischargeable. The appellate court reversed the award reimbursing Carol for her payment of the second mortgage and payment of the tax liability.

This raises a couple of points: 1) a reminder that evidence is what matters when one gets into court; 2) that Indiana trial courts share jurisdiction with the federal Bankruptcy Court in determining dischargeability of debt; and 3) not all debts are dischargeable in bankruptcy and the creditor ex-spouse needs to be consult their attorney as soon as they get a Notice of Bankruptcy.

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