As a matter of state and constitutional law, is jail possible for failure to pay a civil judgment? Even if it were viewed as a quasi-criminal fine, inability to pay means they’d have to be offered a payment plan before being thrown in jail. I would think that the automatic stay would either get them out of jail or avoid it by filing before the hearing. State law fraud is not the same as bankruptcy fraud, and there is also an issue of whether clients had a full and fair opportunity to litigate in state court. One does not go to jail for failure to pay a civil judgment, one goes to jail for contempt/sanctions for failure to do what the court ordered, i.e. pay the civil judgment. Contempt has to be willful, and not bankruptcy willful, really willful, they have to have the ability to do what was ordered by the court, unless it is a criminal fine or criminal contempt in which case willful goes out the window. Since the other side has asked for jail for filing a motion, seems like they are asking for the judge to hold your clients in contempt / sanction- which would be civil contempt, but court civil contempt wherein your client would hold the keys to the jail in his pocket, i.e. bond should be set in the amount the court ordered to be paid. If the jail is criminal in nature or it is a non-bondable civil contempt (like being rude to the court, etc), the bankruptcy will not get client released. It seems like the kind of civil contempt here would not keep them in jail. Since the only real reason not to file a Chapter 7 now would be the state court fraud issue’s res judicata effect on the bankruptcy is filing this as a 13 under the 1328/523 approach to take it out of the plaintiff’s and plaintiff attorney’s hands under willful and malicious.
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