In Re Suarez

149 B.R. 193, 1993 Bankr. LEXIS 44, 1993 WL 6420
CourtUnited States Bankruptcy Court, D. New Mexico
DecidedJanuary 8, 1993
Docket19-10371
StatusPublished
Cited by11 cases

This text of 149 B.R. 193 (In Re Suarez) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. New Mexico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Suarez, 149 B.R. 193, 1993 Bankr. LEXIS 44, 1993 WL 6420 (N.M. 1993).

Opinion

ORDER WITHDRAWING AND REISSUING MEMORANDUM OPINION

MARK B. McFEELEY, Chief Judge.

IT IS ORDERED that the Memorandum Opinion in this matter issued December 18, 1992, is hereby withdrawn and the opinion enclosed herewith is issued in its place.

MEMORANDUM OPINION

This matter came before the Court on Debtor’s Motion to Recover Garnished Wages in Violation of Stay. Having considered the facts, the memoranda of law, the applicable law, and otherwise being fully informed and advised, the Court finds the motion is well taken and will be granted.

*195 FACTS

In December of 1990, the marriage of the debtor Carlos Suarez (“Debtor”) and his former wife Gladys Suarez (“Gladys”) was dissolved by a Final Judgment of Dissolution of Marriage entered by the Eighteenth Judicial Circuit Court for Brevard County, Florida. The judgment ordered the Debtor to pay to Gladys $200 per month for 24 months as rehabilitative alimony and $600 per month as permanent periodic alimony. On November 18, 1991, the circuit court entered an Income Deduction Order which ordered the Debtor’s employer to deduct $800 per month, plus a monthly processing fee, from monies owed to Carlos. The amount to be deducted was not to exceed 50% of the Debtor’s monthly income.

Carlos Suarez filed a Chapter 13 proceeding in New Mexico on April 16, 1992. Notice of the bankruptcy was mailed to Gladys’ attorney on April 20, 1992.

On or about May 7, 1992, Gladys filed a Motion to Amend Income Deduction Order with the Brevard County circuit court. An Amended Income Deduction Order was entered by the circuit court on or about June 5, 1992, which ordered the Debtor’s employer to deduct $800 per month from amounts owed to the Debtor and to remit the money to Gladys’ attorney for deposit into a trust account under his control.

DISCUSSION

The Debtor asserts that both his pre-petition and post-petition earnings are property of the estate and that garnishment of his wages is a violation of the automatic stay. The Debtor seeks return of the garnished wages, attorney fees, and compensatory damages. Gladys Suarez asserts that the garnished wages are not subject to the automatic stay because the garnished wages are subject to Gladys’ equitable interest and are, therefore, not property of the estate.

I. VIOLATION OF THE AUTOMATIC STAY

The phrase “property of the estate” is defined in Section 541. In a Chapter 13 proceeding this definition is expanded by Section 1306, which states Property of the estate includes, ... earnings from services performed by the debtor after the commencement of the case and before the case is closed....” 11 U.S.C. § 1306(a)(2); Mack v. Dept. of Public Welfare, 46 B.R. 652, 655 (Bankr.E.D.Pa.1985); Thus, the Debtor’s post-petition wages are property of the bankruptcy estate.

Garnishment of a Chapter 13 debtor’s post-petition earnings is a violation of the automatic stay. Mack, 46 B.R. at 656. Garnishment is an act to collect or recover a claim from property of the estate, whether the garnishment is filed prior to or subsequent to the filing of the bankruptcy petition. O’Connor v. Methodist Hospital of Jonesboro, Inc. (In re O’Connor), 42 B.R. 390, 392 (Bankr.E.D.Ark. 1984). The automatic stay protects all property of the estate and prohibits any proceedings against property of the estate, even when the proceedings are “designed to enforce alimony or support obligations.” Moore v. Moore (In re Moore) 22 B.R. 200, 201 (Bankr.M.D.Fla.1982); See also, Matter of Daugherty, 117 B.R. 515, 518 (Bankr.D.Neb.1990).

It is immaterial that the original order of garnishment occurred prior to the filing of the bankruptcy petition. Pursuant to 11 U.S.C. Section 362, the automatic stay which is created by the filing of a bankruptcy petition prohibits “the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case” under Title 11. In re Raboin, 135 B.R. 682, 684 (Bankr.D.Kan.1991); 11 U.S.C. Section 362(a). The operation of a garnishment order to enforce a judgment for support is, therefore, automatically stayed. Raboin, 135 B.R. at 684.

Here, Gladys Suarez seeks collection on a judgment for alimony through the garnishment of the Debtor’s post-petition earnings. The judgment for which Gladys seeks collection was entered against the Debtor before his bankruptcy proceeding was filed. The Debtor’s post-petition earnings are property of the estate. Thus, the *196 Debtor’s post-petition wages were garnished in violation of the automatic stay and are property of the bankruptcy estate.

Gladys Suarez’s assertion that she has an equitable interest in the income and property of the Debtor due to the award of alimony by the Florida court is unsupported by case law. The award of alimony is, however, not dischargeable. In a case such as this, if the alimony payment is not dealt with by the plan, or if the debtor fails to perform under the terms of the plan, the party due alimony payments may seek relief from the automatic stay or seek to have the case dismissed or converted to a Chapter 7 proceeding.

The Debtor also asserts that wages garnished within the ninety days prior to filing the Chapter 13 petition are property of the estate. The Debtor, however, states no authority for this assertion. It appears to this Court that the Debtor is asserting that wages garnished within ninety days of filing the Chapter 13 petition constitute a preferential transfer under Section 547 of the Bankruptcy Code. However, a preferential transfer action has not been filed nor has the movant asserted the elements required to recover a transfer under Section 547. This Court finds that monies paid pursuant to the writ of garnishment prior to the filing of the bankruptcy petition are not affected by the automatic stay and are not, absent some other action being brought, property of the estate.

II. RELIEF FOR VIOLATION OF THE AUTOMATIC STAY

Section 362(h) states the consequences of violating the automatic stay provisions of the bankruptcy code. Section 362(h) states:

[A]n individual injured by any willful violation of a stay provided by this section shall recover actual damages including costs and attorney’s fees, and in appropriate circumstances, may recover punitive damages.

11 U.S.C. § 362(h).

A “willful violation” of the automatic stay does not require specific intent to violate the stay. In In Re Brockington, that court stated:

A “willful violation” does not require a specific intent to violate the automatic stay.

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Cite This Page — Counsel Stack

Bluebook (online)
149 B.R. 193, 1993 Bankr. LEXIS 44, 1993 WL 6420, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-suarez-nmb-1993.