Dist. Ct. did not err in upholding Bankruptcy Ct.’s order, finding that plaintiff-lawyer/debtor in Chapter 7 bankruptcy proceeding could not discharge $12,500.04 in costs of his attorney disciplinary proceedings imposed by Wisconsin Supreme Ct., where such costs could properly be viewed as “penalty” under section 523(a)(7) of Bankruptcy Code. Ct. of Appeals rejected plaintiff’s contention that his disciplinary costs could not be viewed as either fine, penalty or forfeiture for purposes of section 523(a)(7) because said costs served only to compensate defendant for expenses it incurred in underlying disciplinary proceedings against him. Ct. found that instant prosecution expenses are part of expense of governing and are not undertaken with expectation of creating debtor-creditor relationship between party sanctioned and state, where said expenses are paid out of state’s regular expenditures.
Federal 7th Circuit Court
Civil Court
Bankruptcy