Recent Feedback
My wife filed for a divorce and subsequently Chp 7 bankruptcy. The Trustee of Her bankruptcy estate sold one of our properties. The Trustee and I reached a settlement in which x% of proceeds goes to me. The settlement was approved by the bankruptcy judge. Before the order is sent to the Judge for signature, Trustee's attorney expressed interest in accepting an additional 10% to Trustee in return to have "amount to Gary cannot be divided or considered by Family Court" be part of settlement. Trustee's attorney is now back peddling as he is afraid of my wife's family court attorney.Below is the time line:Before the property was sold, the bankruptcy court issued a stay ordering family court "not divide, allocate, distribute, or otherwise exercise jurisdiction over, any property or interest in property,"Despite the Fed Court order, my wife’s fam attorney motioned and obtained a tem order stating: in the event that the Bankruptcy Court determines that the proceeds belong to Gary Wang, the “fam” Court orders funds be distributed ½ to my attorney’s trust account and ½ to my wife’s attorney’s trust account.Settlement is reached between Trustee and I. Approved by the Fed Judge.Last week, my wife’s attorney filed another motion for Additional Temp Order “requests that any proceeds received by Gary Wang or by a company that Gary Wang controls to be paid into the registry of the court”.Issues: 1. It is the view of bankruptcy attorney representing me that both my wife’s attorney’s motions and the fam court order contemptible to the Fed Court’s order. My fam attorney did not think it was contemptible since the order says “if” I receive any money. I disagree with my fam attorney.2. Since when one files chp 7 bankruptcy, one surrenders one’s portion/interest in the community estate to the bankruptcy Trustee, what’s been determined my portion by the Fed Court should not be subject to the Fam Court’s further division, in my opinion.3. It is my Wife’s attorney’s firm belief, that even if the bankruptcy court orders the money distributed to Mr. Wang and states that it cannot be further divided by the Family Law Court that the Family Law Court CAN divide the money and/or use it for attorney's fees. My fam attorney is seems to be at a loss.What I’m looking for is specific laws or case laws that support my position.Thank you.
Optional Information: State/Country relating to question: Texas
Issues: 1. It is the view of bankruptcy attorney representing me that both my wife’s attorney’s motions and the fam court order contemptible to the Fed Court’s order. My fam attorney did not think it was contemptible since the order says “if” I receive any money. I disagree with my fam attorney.A: The automatic stay is probably the most powerful protection given to debtors under the Code. It acts as a blanket injunction. Among other things, it prevents creditors from attempting to collect any prebankruptcy claim or from enforcing most types of pre-bankruptcy judgments. It also enjoins the continuation of most pending civil proceedings against the debtor; and suspends setoffs of mutual debts between creditors and the debtor. See 11 USC § 362(a)(1),(2),(3),(6),(7),(8).For the duration of the stay, creditors are also barred from creating, perfecting or enforcing liens against property of the bankruptcy estate (11 USC § 362(a)(4) & (5)). Thus, a secured creditor cannot foreclose on the debtor's real or personal property, even if it was in the creditor's possession when the bankruptcy petition was filed. (The creditor may even be required to turn over such property to the debtor. See 11 USC § 542.Exceptions—creditor actions exempt from stay: Several actions against the debtor are excepted from the automatic stay and thus may be commenced or continued notwithstanding the bankruptcy filing (e.g., actions to establish Paternity or concerning child custody or visitation, actions to establish or modify an order for domestic support obligations, actions to collect domestic support obligations from property not part of the estate, actions by a governmental unit to enforce its “police or regulatory power,” etc.). [11 USC § 362(b). Your facts describe a domestic relations property division hearing and order. Such an action is void in violation of of the automatic stay, and you can bring a motion for contempt against the attorney who requested the order. Note that if the judge was aware of the bankruptcy stay at the time that the hearing was commenced, you could bring an action for contempt against the judge, because the judges' holding a hearing and making an order is taken in the competel absence of judicial authority. 2. Since when one files chp 7 bankruptcy, one surrenders one’s portion/interest in the community estate to the bankruptcy Trustee, what’s been determined my portion by the Fed Court should not be subject to the Fam Court’s further division, in my opinion.A: Since Community Property becomes estate property when a spouse's bankruptcy petition is filed, a postpetition state court marriage dissolution property division judgment ordering the debtor to convey title to his or her former spouse is unenforceable as against the bankruptcy trustee. In re Willard (9th Cir. BAP 1981) 15 BR 898, 900–901—bankruptcy court order denying turnover of family residence by trustee to debtor's former spouse affirmed; In re Keller,185 BR 796, 799-800.3. It is my Wife’s attorney’s firm belief, that even if the bankruptcy court orders the money distributed to Mr. Wang and states that it cannot be further divided by the family law Court that the Family Law Court CAN divide the money and/or use it for attorney's fees. My fam attorney is seems to be at a loss.A: It is beyond dispute that a federal court order preempts state court action, under the Supremacy Clause, absent reversal by a federal court of appeals or the Supreme court. See e.g., Perez v. Cambell, 402 U.S. 637 (1971). Note: I'm not taking a position here on whether or not your bankruptcy court order does or does not finally dispose of your particular property issue. However, I agree that to the extent that the attorney obtained an order concerning community property, he/she is in contempt of the bankruptcy stay, the state court order is void, and that all community property is part of the bankruptcy estate, unless it has finally been partitioned by the state court prior to filing of the bankruptcy petition. See In re Robterson, 203 F.3d 855 (Fed. 5th. Cir. 2/11/2000).Hope this helps. NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation. If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!
To Socrateaser:
Thank you very much for answering my questions. I'm afraid those are not the types of answers I was looking for. Maybe its because I did not state my questions correctly.
1, Fed Judge's order "not to divide...." was part of "Order Regarding Motion For Relief from Automatic Stay". I'm not sure if this is the same as the Automatic Stay you are talking about in your answer.
2. The property in question had already been sold and the proceeds are in the Bankruptcy Trustee's account. Therefore, there is no transferring of title issue. The Trustee and I reached an agreement on the division of the proceeds and the Judge approved it. Now my wife's fam attorney is filing a motion to order any proceed I might receive (I have not received any. The Settlement has not been signed off by the Fed Judge yet) be deposited with fam court registry.
My last question was rather straight forward: Should the Fed Court rule that $x goes to me and the amount should not be divided or considered by the Divorce Court, Does the Family Court have to obey the order? What specific laws or case laws in that regard?
One note: the family court has not made any property divisions except making that ruling mentioned in the 2nd paragraph of Time line.
Thanks again for your time and diligence. Your help is important to me and it is appreciated.
Relist: Inaccurate answer.
1, Fed Judge's order "not to divide...." was part of "Order Regarding Motion For Relief from Automatic Stay". I'm not sure if this is the same as the Automatic Stay you are talking about in your answer.A: The automatic stay arises by operation of law at the time of the filing of the bankruptcy petition. It remains in force until the case is discharged, at which point a permanent injunction occurs to prohibit further actions against the debtor for anything contained in the discharge order.Relief from the automatic stay may be granted by a court to a creditor where there is some good cause reason why the creditor should be permitted to continue an action or collection effort against the debtor (e.g., eviction, foreclosure, bulk sale, or some pending state court action where the bankruptcy court does not want to resolve the matter on its own).There is no way for me to determine whether or not opposing counsel is in contempt of the bankruptcy court without reviewing both the bankruptcy court's orders and the family court orders. Trying to guess without having the exact text of each order in front of me would be incompetent speculation.2. The property in question had already been sold and the proceeds are in the Bankruptcy Trustee's account. Therefore, there is no transferring of title issue. The Trustee and I reached an agreement on the division of the proceeds and the Judge approved it. Now my wife's fam attorney is filing a motion to order any proceed I might receive (I have not received any. The Settlement has not been signed off by the Fed Judge yet) be deposited with fam court registry.My last question was rather straight forward: Should the Fed Court rule that $x goes to me and the amount should not be divided or considered by the divorce court, Does the family court have to obey the order? What specific laws or case laws in that regard?A: As discussed in my original answer above, if the bankruptcy court makes an order that divides your property rights, then the state court cannot change that order, because to do so would be in contempt of the bankruptcy court, the order of which absolutely preempts any state court order. Quoting from my first answer above:
The above-quoted case law is "on point" with your issue, in my opinion.
Hope this helps.
NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation. If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!
Experience: Retired (mostly)