April Wimberley—Senior Attorney, National Legal Research Group

            A bankruptcy court recently awarded attorney’s fees, compensation for emotional distress, and punitive damages to a debtor whose ex-husband continued litigating their divorce case in violation of the automatic stay. In re Payne, No. 20-30524 (Bankr. E.D. Va. Mar. 22, 2021). On January 15, 2020, the Circuit Court of Chesterfield County, Virginia, entered a final decree in the divorce case between Cynthia Payne and Thomas Payne. Thereafter, on January 31, 2020, Ms. Payne filed a Chapter 13 bankruptcy petition in the Bankruptcy Court for the Eastern District of Virginia. In response to the debtor’s bankruptcy filing, the ex-husband, through his attorney, filed several documents in the divorce case, including a motion to stay and a motion to rehear and reconsider. The respondents maintained that the purpose of the motion to stay was to prevent the expiration of the state court’s jurisdiction due to the debtor’s bankruptcy and to address her alleged failure to disclose the existence of a bank account during the divorce litigation. The motion to rehear and reconsider aimed to have the state court reconsider issues of equitable distribution. The respondents did not seek stay of relief from the bankruptcy court before filing the state court motions.

Lee Dunham, Senior Attorney, National Legal Research Group

            Bankruptcy Code § 521(1) places an affirmative duty upon a debtor to disclose all assets to the bankruptcy court. A known cause of action that has accrued is an asset that must be scheduled under Bankruptcy Code § 521(1). See Eubanks v. CBSK Fin. Group, Inc., 385 F.3d 894, 897 (6th Cir. 2004); Cusano v. Klein, 264 F.3d 936, 945 (9th Cir. 2001). An unliquidated cause of action need not actually be filed prior to the commencement of the bankruptcy in order to qualify as an asset that must be scheduled. See Barletta v. Tedeschi, 121 B.R. 669, 671-72 (N.D.N.Y. 1990). However, debtors frequently neglect to list unliquidated causes of action as assets, whether because they have filed a bankruptcy without the assistance of a competent bankruptcy attorney or because, through simple oversight or lack of understanding, they failed to inform their bankruptcy counsel of their existing claims.