Central District Consumer Bankruptcy Attorney's Association

Jim:
This issue has been percolating now for a few months - I remember having this decision after the annual dinner while waiting to get our cars.
A careful reading of 523(a)(3) suggests to me that the after acquired CP is not protected. Here's how I get there.
Take the following hypothetical: filing spouse is the good person and non-filing spouse is the bad actor. As instructed by 523(a)(3), creditor holding a community claim files and prevails in a 523 action against non-filing (bad actor) spouse. Under these facts and based on 523(a)(3), the creditor remains entitled to recover against the filing (innocent) spouse's community property.
To my mind, this demonstrates that Congress intended to protect the creditor's rights over those of the innocent spouse. From a policy argument perspective, I don't find this result so offensive since, in most cases, the innocent spouse probably received (perhaps even without knowing it) the benefit of the bad actor's actions. This is kind of an unjust enrichment concept.
Of course 523(a)(3) does not actually apply because of 523(b), but ad actor spoils the barrel - there is no community property discharge under 523(a)(3) when the other spouse is denied a discharge.
To be completely fair, 523(b)(2)(A) talks about a denial of discharge under 727, not a non-dischargeable claim under 523(a). One might argue that the lesser "penalty" of a non-dischargeable claim should/may not have the same extreme impact on the innocent spouse as a denial of discharge. On the other hand, the detriment to the innocent spouse would be limited to the amount of the non-dischargeable claim.
David A. Tilem
Law Offices of David A. Tilem
206 N. Jackson St., #201
Glendale, CA 91206
Tel: 818-507-6000 * Fax: 818-507-6800
www.TilemLaw.com
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I guess it goes without saying that the motion and/or order should include the recording information from the judgment lien that was avoided. The title company handling the close should record the order avoiding lien (and if necessary a copy of the motion) and issue a lender's policy of title insurance (without excepting the judgment lien) based on your motion and order. Once the title company is willing to insure title, the lender should have no argument.
Sam Benevento
South Bay Bankruptcy Attorney
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From jim@wsrlaw.net Wed Jul 09 09:24:47 2014
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Thread-Topic: [cdcbaa] Community discharge issue
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Subject: RE: [cdcbaa] Community discharge issue
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A question for Dennis M, the expert in such issues. If Husband &Wife file a joint Chapter 7 case and creditor obtains a nondischargeability judgment against H only, can that nondischargeability judgment be enforced against after-acquired community property, such as H's earnings? Or is that after-acquired community property protected by the community discharge received by W?
James R. Selth
Certified Bankruptcy Specialist*
Weintraub & Selth, APC
11766 Wilshire Boulevard, Suite 1170
Los Angeles, California 90025
Telephone: (310) 207-1494
Facsimile: (310) 442-0660
E-Mail: jim@wsrlaw.net
*Certified by State Bar of California as Certified Legal Specialist in Bankruptcy Law
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