In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 16‐1422 & 16‐1423
KAREN SMITH,
Plaintiff‐Appellant,
v.
CAPITAL ONE BANK (USA), N.A.
and KOHN LAW FIRM S.C.,
Defendants‐Appellees.
____________________
Appeals from the United States District Court for the
Eastern District of Wisconsin.
Nos. 15‐CV‐0849 and 15‐CV‐0851 — Lynn Adelman, Judge.
____________________
ARGUED NOVEMBER 4, 2016 — DECIDED DECEMBER 22, 2016
____________________
Before FLAUM and KANNE, Circuit Judges, and MAGNUS‐
STINSON, District Judge.*
FLAUM, Circuit Judge. Plaintiff‐appellant Karen Smith filed
for bankruptcy. During the course of the bankruptcy proceed‐
* Of the Southern District of Indiana, sitting by designation.
2 Nos. 16‐1422 & 16‐1423
ings, defendant‐appellee Capital One Bank USA, N.A. (“Cap‐
ital One”), represented by defendant‐appellee Kohn Law
Firm S.C. (“Kohn”), filed suit against Smith’s husband to col‐
lect on a credit card debt he owed. Appellant Smith initiated
an adversary proceeding in the bankruptcy court, alleging
that appellees had violated the co‐debtor stay of 11 U.S.C.
§ 1301. The bankruptcy court granted summary judgment for
appellant Smith, holding that Capital One’s lawsuit against
Smith’s husband had violated the co‐debtor stay due to the
operation of Wisconsin marital law, Wis. Stat. § 766.55, which
makes marital property available to satisfy certain kinds of
debts. On interlocutory appeal, the district court reversed the
bankruptcy court, holding that the co‐debtor stay did not ap‐
ply despite the application of Wisconsin marital law. We af‐
firm.
I. Background
Appellant Smith filed for bankruptcy under Chapter 13 in
July 2011. Prior to that, Smith’s husband had obtained a Cap‐
ital One credit card that he used for consumer debts for the
Smith family. Smith’s husband did not join Smith’s bank‐
ruptcy petition and Smith did not list him (or anyone else) as
a co‐debtor.1 In December 2011, the bankruptcy court con‐
firmed Smith’s Chapter 13 plan.
In July 2014, during Smith’s repayment period under her
bankruptcy plan, Capital One, through Kohn, sued Smith’s
1 Smith listed Capital One as an unsecured creditor in her bankruptcy
schedules, and Capital One received notice of the bankruptcy. Capital One
then filed a claim for $1,850.08 for “goods sold.” However, this was in con‐
nection with an unrelated debt for Smith’s purchases at Kohl’s not made
using Mr. Smith’s Capital One credit card.
Nos. 16‐1422 & 16‐1423 3
husband in Wisconsin state court over amounts owed on his
credit card account. Capital One received judgment in its fa‐
vor in August 2014, but has not attempted to enforce the judg‐
ment.
In February 2015, Smith initiated an adversary proceeding
in bankruptcy court against appellees. She brought six causes
of action, alleging violations of the co‐debtor stay, 11 U.S.C.
§ 1301(a); the Wisconsin Consumer Act, Wis. Stat. § 427.104;
and the Fair Debt Collection Practices Act, 15 U.S.C. § 1692(d)‐
(e). All of Smith’s claims rested on the theory that Smith’s hus‐
band’s credit card debt was covered by the co‐debtor stay due
to the operation of Wisconsin marital law, Wis. Stat. § 766.55,
and that Capital One and Kohn had violated the co‐debtor
stay by suing Smith’s husband.
In April 2015, Smith moved for summary judgment. The
bankruptcy court granted Smith’s motion, holding that “the
Capital One debt is a debt of the Debtor [appellant Smith] sub‐
ject to the co‐debtor stay.”
Capital One and Kohn sought and obtained leave for an
interlocutory appeal to the district court. The district court
held that the husband’s credit card debt was not Smith’s con‐
sumer debt, reversed the bankruptcy court, and remanded the
case back to the bankruptcy court to enter judgment in appel‐
lees’ favor. The court concluded that “consumer debt of the
debtor,” as used in § 1301(a), does not include a debt for
which the debtor is not personally liable but that may be sat‐
isfied from the debtor’s interest in marital property. Though
the district court’s order remanded the case to the bankruptcy
court, the former’s decision effectively ended Smith’s action,
since all of her claims depended on the application of the co‐
debtor stay rule. Smith now appeals that decision.
4 Nos. 16‐1422 & 16‐1423
II. Discussion
This Court has jurisdiction over appeals from final district
court decisions. 28 U.S.C. § 158(d)(1). In the bankruptcy con‐
text, both the bankruptcy court decision and the district court
decision must be final. In re Behrens, 900 F.2d 97, 99 (7th Cir.
1990). Though “a district court’s decision on appeal from a
bankruptcy court’s interlocutory order is generally not re‐
garded as final and appealable,” id., a “district court’s deci‐
sion on a bankruptcy court’s interlocutory order may leave
nothing for the bankruptcy court to do, and thus transform
the bankruptcy court’s interlocutory order into a final appeal‐
able order,” id. n.1 (citing In re Cash Currency Exch., Inc., 762
F.2d 542, 545 n.3 (7th Cir. 1985)); see also In re Jartran, 886 F.2d
859, 861 (7th Cir. 1989) (“[A] district court order remanding
the case to the bankruptcy court may qualify as final if all that
remains to do on remand is a purely … ministerial task … .”).
In this case, the district court’s reversal of the bankruptcy
court’s grant of summary judgment foreclosed all of Smith’s
causes of action and left nothing for the bankruptcy court to
do except enter judgment in appellees’ favor. Therefore, we
may review the district court’s decision.
We review a summary judgment decision de novo, with
factual inferences construed in favor of the non‐moving party.
Chi. Reg’l Council of Carpenters Pension Fund v. Schal Bovis, Inc.,
826 F.3d 397, 402 (7th Cir. 2016).
A. The Co‐Debtor Stay
In addition to automatically staying claims against the
debtor herself, see 11 U.S.C. § 362, the Bankruptcy Code pro‐
vides other (albeit narrower) protections when co‐debtors are
involved:
Nos. 16‐1422 & 16‐1423 5
[A]fter the order for relief under this chapter, a
creditor may not act, or commence or continue
any civil action, to collect all or any part of a con‐
sumer debt of the debtor from any individual
that is liable on such debt with the debtor, or
that secured such debt … .
11 U.S.C. § 1301(a).2 For the co‐debtor stay to apply: 1) there
must be an action to collect a consumer debt, 2) the consumer
debt must be of the debtor, and 3) the action to collect must
be against an individual that is liable on such debt with the
debtor. The parties agree that Smith’s husband’s Capital One
credit card debt was a “consumer debt” and that appellee’s
action was against the husband.
However, Smith and appellees disagree as to whether the
credit card bills were a “consumer debt of the debtor [appellant
Smith],” triggering the co‐debtor stay protections, as opposed
to simply being a consumer debt of the husband. Ordinarily,
one’s credit card debt is one’s own, and the co‐debtor stay
would not bar a creditor from collecting on a non‐bankrupt
spouse’s own debts simply because the other spouse had filed
for bankruptcy. Smith argues that under a broader definition
2 The Bankruptcy Code defines several of the contested terms in the co‐
debtor stay. While the phrase “consumer debt of the debtor” as a whole is
not defined, “consumer debt” is defined as a “debt incurred by an indi‐
vidual primarily for a personal, family, or household purpose,” and
“debt” is defined as a “liability on a claim.” 11 U.S.C. §§ 101(8), (12).
“Claim” is defined as a “right to payment, whether or not such right is
reduced to judgment.” Id. § 101(5). Additionally, a “claim against the
debtor” is to be construed to include claims against the property of the
debtor. Id. § 102(2).
6 Nos. 16‐1422 & 16‐1423
of “consumer debt of the debtor,” and by operation of Wis‐
consin marital law, her husband’s credit card debt became
Smith’s for purposes of the co‐debtor stay.
We agree with appellees that the credit card debt was not
covered by the co‐debtor stay. The phrase “consumer debt of
the debtor,” as Smith points out, is not itself defined in the
statute; and Smith attempts to fill this gap by highlighting the
Bankruptcy Code definitions of “debt” (as “liability on a
claim”), and “claim” (as a “right to payment”). Thus, argues
Smith, this Court should read “debt of the debtor” to include
“liability on a claim against the debtor.” However, the Bank‐
ruptcy Code explicitly provides debtors with protections
against “claims” in other provisions. See, e.g., 11 U.S.C.
§ 362(a)(1) (forbidding the commencement of an action to “re‐
cover a claim against the debtor”) (emphasis added). And
“[w]here Congress includes particular language in one sec‐
tion of a statute but omits it in another section of the same Act,
it is generally presumed that Congress acts intentionally and
purposefully in the disparate inclusion or exclusion.” Russello
v. U.S., 464 U.S. 16, 23 (1983). Smith’s proposed definition also
effectively reads out of § 1301 the important qualification that
the debt be “of the debtor.” See 11 U.S.C. § 1301(a); River Rd.
Hotel Partners, LLC v. Amalgamated Bank, 651 F.3d 642, 651 (7th
Cir. 2011), aff’d sub nom. RadLAX Gateway Hotel, LLC v. Amal‐
gamated Bank, 132 S. Ct. 2065 (2012); TRW Inc. v. Andrews, 534
U.S. 19, 31 (2001) (“It is a cardinal principle of statutory con‐
struction that a statute ought, upon the whole, to be so con‐
strued that, if it can be prevented, no clause, sentence, or word
shall be superfluous, void, or insignificant.”) (citations and in‐
ternal quotation marks omitted).
Nos. 16‐1422 & 16‐1423 7
Furthermore, attempting to collect a judgment from a
spouse’s marital property would likely violate the automatic
stay that already protects the filing spouse. See 11 U.S.C. § 362;
In re Thongta, 401 B.R. 363, 368 (Bankr. E.D. Wis. 2009) (dock‐
eting of judgment against property of the bankruptcy estate
“created a lien on the property under [Wisconsin law,3 and]
violated the automatic stay of Bankruptcy Code § 362(a)(4)”).
The automatic stay prevented appellees from asserting a
“right to payment” from any of appellant’s marital property
during the bankruptcy proceedings, so Smith had no “liability
on a claim” in the first place. If we interpreted the co‐debtor
stay to eliminate the same liability, and thus to provide the
same protections against collection—as Smith suggests we
do—then we would render that stay duplicative of the auto‐
matic stay. Such an interpretation is not appropriate. See River
Rd. Hotel Partners, 651 F.3d at 651 (“Interpretations that result
in provisions being superfluous are highly disfavored.”). The
best reading of the co‐debtor stay involves shielding non‐fil‐
ing co‐debtors from actions to collect on the consumer debts
only of the filing debtor. As Smith does not demonstrate that her
husband’s credit card debt is her own, the co‐debtor stay does
not apply.
3 Wisconsin Statute § 806.15(1) provides, “Every judgment properly en‐
tered in the judgment and lien docket showing the judgment debtor’s
place of residence shall, for 10 years from the date of entry, be a lien on all
real property of every person against whom the judgment is entered.”
However, § 806.15(4) states that liens under the statute do not attach to the
non‐incurring spouse’s property unless that spouse is also named as a de‐
fendant in the original action. In this case, it does not appear that Smith
was named as a defendant in Capital One’s lawsuit against Smith’s hus‐
band.
8 Nos. 16‐1422 & 16‐1423
B. Wisconsin Marital Law
Even if appellant’s reading of § 1301 were correct, applica‐
tion of Wisconsin marital law would not convert her hus‐
band’s debts into her own. In Wisconsin, married individuals
can have both individual and marital property. See Wis. Stat.
§ 766.55. Debts incurred during marriage are “presumed to be
incurred in the interest of the marriage or the family,” id.
§ 766.55(1), and “[a]n obligation incurred by a spouse in the
interest of the marriage or the family may be satisfied only
from all marital property and all other property of the incur‐
ring spouse [Smith’s husband],” id. § 766.55(2)(b). Further, in
order to satisfy a judgment for a debt, a successful creditor
“may proceed against either or both spouses to reach marital
property available for satisfaction of the judgment.” Id.
§ 803.045(3).
Smith says that once appellees obtained a judgment
against her husband, they could collect it from either the hus‐
band’s individual property or the marital property belonging
to both spouses, and that appellees therefore created a liabil‐
ity on Smith’s part under the co‐debtor stay. Section 766.55(2)
would ordinarily allow appellees to satisfy Capital One’s
judgment from the Smiths’ marital property were the Smiths
not under Chapter 13 protections. Appellees in this case, how‐
ever, could not have sought to satisfy the judgment against
Smith’s husband from the marital property due to the auto‐
matic stay.4 Consequently, Smith had no liability whatsoever,
and thus no debt, for her husband’s credit card bills.
4 Capital One has not tried to satisfy the judgment from either spouse’s
individual property. Though appellees would likely be entitled to satisfy
their judgment from the husband’s individual property under Wisconsin
Nos. 16‐1422 & 16‐1423 9
Simply obtaining a judgment against a non‐filing spouse
who happens to have shared property interests with the filing
spouse, without more, does not make the debts involved in
that lawsuit the debts of the filing spouse under Wisconsin
law. “[Wisconsin Statute] § 766.55(2)(a) and (b) … do[] not
create a direct cause of action against the noncontracting
spouse. None of the paragraphs in § 766.55(2) create[s] a di‐
rect cause of action against a spouse. Indeed, no part of
§ 766.55(2) creates any cause of action, direct or indirect.”
St. Mary’s Hosp. Med. Ctr. v. Brody, 519 N.W.2d 706, 711 (Wis.
Ct. App. 1994). Furthermore, “[n]othing in § 803.045 … im‐
poses a liability against either spouse under § 766.55(2)(a) or
(b) …. Rather, § 803.045 is procedural. It authorizes a creditor
to proceed against a spouse under the circumstances de‐
scribed in the statute to reach the property described in
§ 766.55(2).” Id. at 712. The Wisconsin courts have made clear
that, with respect to consumer debts, the state’s marital laws
do not give rise to direct causes of action against, or liability
on the part of, the non‐incurring spouse. In this case, appel‐
lant Smith is the non‐incurring spouse, and therefore is not
liable for her husband’s credit card debt. The debt is not hers.
Smith next argues that she otherwise became liable for her
husband’s credit card debt under Wisconsin’s doctrine of ne‐
cessaries. This common‐law doctrine, codified at Wis. Stat.
§ 765.001(2), provides a direct cause of action against one
law and the Bankruptcy Code, the parties agree that the husband has no
individual property. Relatedly, even if appellant Smith had individual
property at the time of the judgment, appellees concede that they could
not satisfy their judgment from that property without running afoul of the
automatic stay, Wisconsin law, or both.
10 Nos. 16‐1422 & 16‐1423
spouse for any marital “necessaries”5 incurred by the other
spouse during the marriage. Smith says the possibility of a di‐
rect cause of action against her for her husband’s credit card
debts brings those debts within the co‐debtor stay. However,
she raises this theory for the first time on appeal to this Court,
and it is therefore waived. See Domka v. Portage Cty., Wis., 523
F.3d 776, 783 (7th Cir. 2008). The passages appellant cites from
previous filings to avoid waiver refer only to Smith’s broader
legal theory that she is liable for her husband’s debt. Raising
this general theory below was not enough to adequately raise
the specific doctrine‐of‐necessaries theory for appellate re‐
view. Id. Furthermore, even if the doctrine did create a direct
cause of action against appellant, Smith provides no evidence
that the credit card debt was for necessaries, as opposed to
ordinary consumer goods, and she does not explain why this
situation would trigger the co‐debtor stay, as opposed to the
automatic stay. As noted above, appellees have not brought a
lawsuit directly against Smith and have not sought to satisfy
5 In Wisconsin, marital necessaries are most often medical bills, see, e.g.,
Baldwin Area Med. Ctr. v. Bengston, No. 2015AP1413, 2016 WL 4766037, at
*1 (Wis. Ct. App. Sept. 13, 2016); Med. Coll. of Wis. v. Missimer, 769 N.W.2d
878 (Wis. Ct. App. 2009) (unpublished table opinion) (citing St. Mary’s, 519
N.W.2d 706), but they may also encompass goods and services “necessary
for the adequate support and maintenance of [a spouse’s] minor children
and of the other spouse,” Wis. Stat. § 765.001(2). In medical necessaries
cases, the medical services provider may bring a cause of action directly
against the spouse that did not use the medical services to recover the cost
of the services used by the other spouse. Baldwin, 2016 WL 4766037, at *1.
The parties disagree as to whether an entity that is not the direct provider
of necessaries, such as Capital One, may bring a cause of action against
the non‐incurring spouse under this doctrine. We do not need to resolve
the issue to decide this case and therefore decline to do so.
Nos. 16‐1422 & 16‐1423 11
their judgment against her husband from any of Smith’s indi‐
vidual or marital property.
Smith’s suggested expansion of the co‐debtor stay cuts
against its plain meaning and purpose. The stay was meant to
head off the undue pressure that creditors could otherwise ex‐
ert on a debtor by threatening action against third parties—
often relatives—who have co‐signed the debtor’s debts. For ex‐
ample, take the case of a parent who co‐signs a car lease for
their child, and the child later files for bankruptcy. Without
the stay, the creditor car dealer could receive preferential
treatment from the child by threatening legal action against
the parent. The co‐debtor stay eliminates the risk of such un‐
wanted treatment by shielding the parent from suit on the
child’s debts. The co‐debtor stay, however, is not meant to
shield third parties from facing judgments on their own debts.
Here, for instance, there is no risk of preferential treatment,
since the plaintiff in the collection proceeding (Capital One) is
not a creditor of the debtor who has filed for bankruptcy (ap‐
pellant Smith). So Smith could not have paid off appellees any
sooner, or have given them any other preferential treatment,
as appellees were not seeking payment of the credit card
debts under Smith’s bankruptcy plan.
Appellees’ lawsuit against Smith’s husband did not vio‐
late the co‐debtor stay, and Smith’s adversarial proceeding
was properly dismissed.
III. Conclusion
For the foregoing reasons, we AFFIRM the judgment of the
district court.