By: WISCONSIN LAW JOURNAL STAFF//November 15, 2011//
U.S. Bankruptcy Court
Civil
Bankruptcy
Discharge; marital debts
Even though a divorce agreement dividing the parties’ debts did not contain a hold harmless clause, the spouse who filed bankruptcy remains liable to the other spouse for debts assigned to her.
“Most courts that have interpreted the application of 523(a)(15) when a decree or MSA lacks a hold harmless provision have held that a court order to pay a third party is the equivalent of a hold harmless provision. See In re Gibson, 219 B.R. 195 (B.A.P. 6th Cir. 1998) (debtor’s obligation to pay joint marital debt to third party, which he assumed prepetition pursuant to separation agreement, excepted from discharge even though agreement lacked hold harmless language); In re Schmitt, 197 B.R. 312 (Bankr. W.D. Ark. 1996) (court order to pay was equivalent to hold harmless obligation to former spouse); In re Speaks, 193 B.R. 436 (Bankr. E.D. Va. 1995) (hold harmless inferred).
“Therefore, the failure to plead the existence of a hold harmless provision is not fatal to Mr. Hebel’s cause of action. For the reasons stated above, the complaint states a claim upon which relief can be granted, and Ms. Georgi’s motion to dismiss is denied.”
11-21641 In re Georgi
E.D.Wis., McGarity, Bankr. J.