In re Ferris, Bankruptcy No. 88 B 3599 J.
| Decision Date | 02 December 1988 |
| Docket Number | Bankruptcy No. 88 B 3599 J. |
| Citation | 93 BR 729 |
| Parties | In re Paul Donald FERRIS, Debtor. |
| Court | U.S. Bankruptcy Court — District of Colorado |
Edward T. Navarro, Longmont, Colo., for debtor.
Diane Goldstein, Asst. City Atty., for City of Longmont, Colo.
On March 24, 1988, Debtor filed his voluntary Chapter 13 Petition wherein he listed no secured debt and $19,066.00 in unsecured debt. Of that sum, he listed the City of Longmont as an unsecured creditor for $449.00 as a "Ticket for Custody and Leash Violation".
On June 7, 1988, the Debtor's Chapter 13 Plan was confirmed. Under that Plan, the Debtor was to pay $50.00 per month to the Chapter 13 Trustee for three years. This total of $1,800.00 will be distributed $1,000.00 to Debtor's attorney; $180.00 to the Chapter 13 Trustee; and $620.00 pro rata to the unsecured creditors. There were no objections filed to this Plan.
On August 1, 1988, the City of Longmont filed a motion for Ruling alleging that the Debtor was fined by the City's Municipal Court in two cases for a total amount of $345.00. Thereafter, the Debtor appeared in Municipal Court and stated he was unable to pay his fine. The Municipal Court ordered that in the alternative the Debtor could do community service. However, the Debtor has neither paid the fine nor performed the community service. As a result of the bankruptcy, the Municipal Court stayed the matter pending a ruling from this Court. The City has posed two questions:
1. Does the scheduling of a fine from a municipal court as a debt convert the fine to a debt and stay the Municipal Court from collecting the fine?
2. If the Court is stayed from collecting the fine, can the Municipal Court require the community service that was authorized prior to the filing of the bankruptcy petition?
This Court has held that a criminal restitution obligation is not a "debt" as that term is defined under Title 11, U.S.C. As a result, such obligations are not affected by, and therefore not discharged under a Chapter 13 Plan. In re Johnson, 32 B.R. 614 (Bankr.Colo.1983). The issue in that case was raised prior to confirmation of a Chapter 13 Plan.
In 1986, the Supreme Court held that criminal restitution payments were not discharged in bankruptcy pursuant to 11 U.S.C. § 523(a)(7) in a Chapter 7 case. Kelly v. Robinson, 479 U.S. 36, 107 S.Ct. 353, 93 L.Ed.2d 216 (1986). The dissent in that case by Justices Marshall and Stevens, in addition to disagreeing with the majority opinion, pointed out in footnote 6, the following:
The Court\'s solution only postpones the problem: its holding that restitution obligation is nondischargeable under § 523(a)(7) leaves open the possibility that such obligations will be dischargeable under Chapter 13. See 11 U.S.C. § 1328(a), 3 W.Norton, Bankruptcy Law and Practice § 78.01 (1981); 5 Collier on Bankruptcy ¶ 1328.011c (15th Ed.1986) (); but see In re Newton, supra, 15 B.R. 708 at 710 (Bankr.N.D.Ga.1981) (). The Court\'s opinion therefore does not lay to rest the difficulties the courts will have in coordinating the Bankruptcy Code with state criminal statutes. 107 S.Ct. at 366.
On September 8, 1987, Judge Matheson of this Court took up the gauntlet flung down by Justices Marshall and Stevens in the case of In re Cullens, 77 B.R. 825 (Bankr.Colo.1987). That case held that criminal restitution obligations can be dealt with and discharged under a Chapter 13 Plan.
Reading the text of the Bankruptcy Code and the interplay between § 523, § 727, and § 1328, one is drawn inexorably to the conclusion in Cullens, supra. However, we are cautioned by the Supreme Court in Kelly, supra, ". . . not to be guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy." 107 S.Ct. at 358. After a thorough review of the four score history of the Bankruptcy Act on this issue, the Supreme Court stated:
In light of the established state of the law — that bankruptcy could not discharge criminal judgments — we have serious doubts whether Congress intended to make criminal penalties "debts" within the meaning of § 101(4). 107 S.Ct. at 361.
This Court expressed those same doubts three years earlier in the Johnson case, supra. And, although the Supreme Court stopped short of...
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