1) The Family Court is the proper forum to determine if Husband's bankruptcy discharge applies to debts from the divorce decree. The discharge order did not specify which debts were discharged. 2) Debts from a divorce decree, including a hold harmless provision requiring Husband to pay half the credit union debt, are not automatically discharged through bankruptcy. 3) Husband's nonspecific bankruptcy discharge does not override his obligation in the divorce decree to pay half the credit union debt. The Commissioner erred in ruling the debt was discharged.

1. 1
MEMORANDUM
To: Judge Clary
From: Benjamin Paholke
Date: June 4, 2015
Re: [HUSBAND] v. [WIFE]
Case No. XX-X-XXXXX-X
__________________________________________________________________
QUESTIONS PRESENTED
1. Can a Family Court entertain a motion for contempt if the respondent
spouse asserts a nonspecific Chapter 7 bankruptcy discharge as an
affirmative defense?
2. Does a Chapter 7 bankruptcy discharge a debtor from “hold harmless”
provisions in a Decree of Dissolution?
BRIEF ANSWER
1. Yes. State courts have the power to determine the applicability of a
discharge when it is raised as a defense to a State cause of action filed in
State court.
2. No. Hold harmless provisions create direct liability from the debtor to the
former spouse. The law prohibits discharge of any debts arising from a
divorce, such as a Decree of Dissolution.

2. 2
STATEMENT OF FACTS
On February 1, 2011, [Wife] and [Husband] were legally divorced
pursuant to a Decree of Dissolution (DCD). In the DCD, Wife was liable to pay
$2,587 to a line of credit to Spokane Federal Credit Union (SFCU), and the
husband to pay 50% of the remaining balance after Wife. Further in the DCD was
a “hold harmless” provision, stating “Each party shall hold the other party
harmless from any collection action relating to separate or community liabilities
set forth above.”
On January 30, 2014, Husband filed for Chapter 7 Bankruptcy. The
Discharge Order simply stated “IT IS ORDERED: The debtor is granted a
discharge under 11 U.S.C. §727.” Attached to the Order was a general
explanation of bankruptcy discharge in a Chapter 7 case. At the bottom was a
disclaimer:
“This information is only a general summary of the bankruptcy discharge.
There are exceptions to these general rules. Because the law is
complicated, you may want to consult an attorney to determine the exact
effect of discharge in this case.”
On August 14, 2014, Wife filed a motion to find Husband in contempt for
failing to make payment to SFCU (Wife had already paid her portion of the debt).
On March 20, 2015, the Family Law Commissioner ruled that the debt to Wife
was discharged, and that Wife’s remedy lay in bankruptcy court, denying the
motion.
Wife has filed a motion to revise the Commissioner’s ruling, arguing the
Commissioner erred in deciding Wife’s remedy was in bankruptcy court, and that
Husband’s debt to SFCU was not subject to discharge.

3. 3
IS SPOKANE FAMILY COURT A PROPER FORUM?
The first issue here is whether the Family Law Court is the proper forum
for adjudicating contradictions between a Decree of Dissolution (DCD) and a
party’s Chapter 7 bankruptcy claim. The rule here is that State courts may
determine the applicability of a bankruptcy discharge when that discharge is
raised as a defense to a state cause of action filed in a state court. Herring v.
Texaco, Inc., 161 Wn.2d 189, 195, 165 P.3d 4, 8 (2007). Note that the power of
State courts is not to determine whether a debt in particular is dischargeable;
when a bankruptcy court has made a final decision that a debt is dischargeable,
State courts cannot challenge that order. Id (citing McGhan v. Rutz, 288 F.3d
1172, 1180 (2002)1.
Here, the Discharge Order was not specific as to which debts were
dischargeable and which were not. Further, Wife is not challenging the discharge
itself, but is rather challenging the Commissioner’s (State law) ruling on how the
discharge applies to the DCD, and that Wife’s remedy lies solely in bankruptcy
court. Because the discharge itself is not being collaterally attacked, and Husband
is offering his discharge as an affirmative defense to contempt in Family Court,
Wife’s remedy to the contempt motion may come from Family Court. The
Commissioner erred in ruling Wife’s remedy lay in bankruptcy court.
1 Whilethe facts in Herring involved a Chapter 11 bankruptcy, the Washington Supreme Court’s relianceon
McGhan (a Chapter 7 bankruptcy) suggests that the Chapter of bankruptcy is irrelevantto determining the State
court’s involvement in dischargeability.

4. 4
HUSBAND’S LIABILITY TO WIFE
The second issue in this case is whether the Discharge Order discharged
Husband’s liability to pay 50% of the SFCU debt after Wife. Federal law
explicitly excuses debts arising from a divorce decree or other order of a court of
record from Chapter 7 discharge. 11 U.S.C. §523(a)(15). Specifically, divorce-
related debts are not automatically discharged without a determination from the
bankruptcy court. In re Adam, slip copy, pg.6 (BAP 9th Cir. April 6, 2015) (citing
Gilman v. Golio, In re Golio, 393 B.R. 56, 61 (Bankr. E.D.N.Y. 2008)). Here, the
debt in question was explicitly ordered upon Husband by the DCD, and the
Discharge Order grants a general discharge with no specificity as to which debts
are and are not discharged. Therefore, Husband’s debt to SFCU is not discharged.
Bankruptcy law specifically states a Chapter 7 discharge does not
discharge an individual debtor (such as Husband) from any debt connected to a
divorce or from a court of record. 11 U.S.C. §523(a)(15). In Adam, the debt in
question was the payment of attorney fees to a former spouse ordered by a court
for divorce proceedings. Adam, at 5. There, the court ruled that the debt being
owed to the spouse or former spouse was a necessary element. Id (citing In re
Putnam, 10-19719-A-7, 2012 WL 8134423, at *19 (Bankr. E.D. Cal. Aug. 30,
2012)). In Putnam, the court referenced the legislative history of §523(a)(15),
noting
The exception [to discharge in section 523(a)(15) ] applies only to debts incurred
in a divorce or separation that are owed to a spouse or former spouse, and can be
asserted only by the other party to the divorce or separation.... It is only the
obligation owed to the spouse or former spouse—an obligation to hold the spouse
or former spouse harmless—which is within the scope of this section.

5. 5
Putnam, at *19 (quoting H.R.Rep. No. 103-835 at 55 (1994)).
Hold-harmless provisions create direct liability from the debtor to the
former spouse. Id (citing Ruhlen v. Montgomery (In re Montgomery), 310 B.R.
169, 180 (Bankr. C.D.Cal.2004); see also: In re Francis, 505 B.R. 914, 9202; In re
Radulovic, ADV.05-01078, 2006 WL 6811000, at *3 (B.A.P. 9th Cir. Sept. 29,
2006). Further, debts categorized by §523(a)(15) are not automatically
discharged if a party does not request a determination from the bankruptcy court.
Adam, at 5.
Here, Husband and Wife are subject to a DCD, finalizing a divorce. The
terms of that DCD state that husband shall make payment on a line of credit
which is inferred to be communal debt prior to the DCD. The DCD also
contained a hold-harmless provision, which creates liability between the former
spouses to each other for the debts outlined in the DCD. E.g. Putnam. Because
Husband’s bankruptcy discharge was nonspecific, his liability to Wife for the
SFCU debt was not discharged. Adam, at 5. The Commissioner erred in ruling
his debt to SFCU had been discharged.
CONCLUSION
Because Wife is asking the court to interpret Husband’s discharge in the
context of her motion to hold Husband in contempt, rather than attack the
discharge itself, a State court may hear and rule on arguments within that context.
Because debts arising from the DCD are not specifically discharged, Husband’s
2 In re Francis removed the element of a debt being owed to the former spouse; however the reasoningwas
identical,as thecourt ruled the debt there was incurred by an obligation to hold a spouseharmless.

6. 6
discharge is not a defense to his failure to pay SFCU. The Court must revise the
Commissioner’s ruling.