No. 2009-SC-000442-DG on review of COA No. 2008-CA-001059-MR
The questions presented in this case include 1) whether a trial court could enforce through its contempt powers, an obligation to pay a creditor on a marital debt after the obligor received a post-decree bankruptcy discharge and his former wife failed to institute an adversary proceeding in bankruptcy court; 2) whether a motion for modification of child support was properly denied when child support established in divorce decree was based upon parent’s imputed income as a result of a finding of voluntary underemployment; and 3) an award of attorney fees.
The parties’ divorce decree provided for joint custody of their minor child with husband required to pay child support calculated from his recent history of earnings as a federal prison guard. Husband testified that the parties agreed he should quit his job at the prison because the wife was also employed there as a guard. The wife denied making such an agreement.
The decree also assigned to husband liability for a National City loan on a Dodge Durango which had been repossessed by the time of the decree.
A little more than a year after the decree, husband filed a motion to reduce child support claiming changed circumstances, including health problems, inability to locate correctional work and filing for bankruptcy. Wife countered with motion for attorney fees and to hold husband in contempt for failure to pay the debt on the repossessed Durango. Wife acknowledged she received notice of the bankruptcy and that she did nothing to challenge discharge of the debts. Husband admitted that under the decree, he was responsible for the Durango debt.
The trial court found husband to be in contempt for failure to pay the debt on the Durango, denied his motion to modify child support, and ordered him to pay $500 of wife’s attorney’s fees.
The Court of Appeals affirmed on all issues, as did the Supreme Court.
With respect to child support modification, the court found that the standard for modification was not met because his affidavit did not definitively establish a material and continuing change of circumstances post-decree. The court explained that KRS 403.212(2)(d) specifically states that a parent may be voluntarily unemployed or underemployed without finding that the parent intended to avoid or reduce the child support obligation. In order to prevail, husband needed to show a material, substantial, and continuing change of circumstances existing post-decree which made him less capable of attaining his former income level than existed at the time of the decree. The trial court did not find the requisite showing, the Court of Appeals agreed, and the Supreme Court affirmed.
The trial court held husband in contempt for his failure to pay the loan on the Durango. The bankruptcy statute was amended in 2005 to provide that a Chapter 7 discharge does not discharge a debtor from an obligation incurred in the course of a divorce or separation. In addition, since state court has concurrent jurisdiction to determine the dischargeability of a debt, Kentucky state courts have jurisdiction to determine whether the husband’s obligation on the Durango was discharged in his bankruptcy.
Following BAPCPA amendments to the bankruptcy statutes, a non-support divorce debt is excepted from discharge and there is no requirement that a spouse or child participate in the bankruptcy for the debt to be excepted from discharge. Husband’s payments on the loan were part of the division of marital property and debts, even though in this case there was no hold harmless provision.
Finally, the trial court is not required to make findings on financial resources when awarding attorney’s fees. The statute requires only that the trial court must simply consider the parties’ finances before awarded fees.