Opinion
No. 78-435EG
June 14, 1979
Discharge of Debts — Subsequent Suit — Joint Debt — Tenancy by the Entireties
A discharge in bankruptcy of a husband's debt to a creditor is a bar to a subsequent suit by that creditor against the husband and his wife arising out of a joint debt. See Sec. 70a(5) at ¶ 2684 and Sec. 541(a)(1) at ¶ 9502.
[Digest of Opinion]
Subsequent to the entry of an order discharging the bankrupt from his debts, the creditor, who had been listed as a creditor on the bankrupt's schedules, instituted a suit against both the bankrupt and his wife in state court. The suit was for the recovery of the balance due him on landscaping work allegedly contracted jointly by the bankrupt and his wife. The creditor was seeking to collect his claim by obtaining a judgment which would be a lien against the home owned by the bankrupt and his wife as tenants by the entireties, since the landscaping work was performed for the house. During the bankruptcy proceeding, the creditor had filed a proof of claim but had not objected to the discharge, nor filed a complaint concerning the dischargeability of this debt.Tenancy by the entirety property is not subject to the individual debts of either spouse. If the husband and wife are jointly liable for a debt, a joint judgment is necessary to perfect a lien on their entireties property. Further, entireties property does not pass to the trustee in bankruptcy of either spouse individually under Section 70a (5) since the bankrupt may not transfer the property and it may not be levied upon.
The creditor argued that the bankrupt's joint liability for the debt should be excluded from discharge because the trustee has no right to property attachable under a joint obligation. However, the court found this argument irrelevant and observed that allowing a subsequent execution would destroy the finality of a discharge and violate the "fresh start" policy of the Bankruptcy Act. Additionally, Section 17a provides that a "discharge in bankruptcy shall release a bankrupt from all of his provable debts" with specific exceptions not applicable here. It is clear under the language of Sections 63a(1) and (4) that this debt is provable and that the language of the Act "simply does not permit the additional exception from discharge which . . . [the creditor] . . . asserts." Therefore, the bankrupt's debt was discharged in both its several and joint aspects.