In re: Terry L Wike, 660 B.R. 683

Terry L. Wike, a Nevada attorney, was suspended for mishandling client funds and ordered to pay disciplinary costs under Nevada Supreme Court Rule (SCR) 120.
After filing for Chapter 7 bankruptcy and obtaining a discharge, Wike sought reinstatement to practice law, but the Nevada Supreme Court (SCN) conditioned full reinstatement on his payment of the disciplinary costs.
Wike argued that these costs were discharged in bankruptcy and that the State Bar’s condition violated Bankruptcy Code § 525(a), which prohibits governmental discrimination against discharged debtors.
The bankruptcy court denied Wike's request, holding that the costs were nondischargeable under § 523(a)(7), and ruled it was barred by the Rooker-Feldman doctrine from reviewing the SCN's decision.
The Ninth Circuit Bankruptcy Appellate Panel reviewed whether SCR 120 costs were dischargeable, whether § 525(a) was violated, and the applicability of the Rooker-Feldman doctrine.

Issue	Wike’s Argument	State Bar’s Argument	Held
Does Rooker-Feldman prevent federal review of the state court’s § 525(a) interpretation?	Bankruptcy court can review state court's incorrect bankruptcy interpretations.	State court ruling is final; fed. courts can’t review.	Rooker-Feldman does not bar bankruptcy court review of incorrect state court § 525(a) decisions.
Are disciplinary costs under SCR 120 excepted from discharge under § 523(a)(7)?	Costs are compensatory, not penal, so are dischargeable.	Costs are penalties “payable to and for the benefit of” the government, so are nondischargeable.	SCR 120 costs are compensatory and thus dischargeable; bankruptcy court erred.
Did State Bar violate § 525(a) by conditioning reinstatement on payment of discharged debt?	Yes; State Bar relied "solely" on nonpayment of a discharged debt.	No; motives were regulatory (rehab, public protection), not just debt collection.	State Bar’s regulatory motive is irrelevant under Supreme Court precedent (NextWave); violating if nonpayment of discharged debt is sole reason.
Did prepetition timing of debt assessment matter for § 525(a) analysis?	No, discrimination based on nonpayment after discharge is covered by § 525(a).	Yes, because some costs were imposed before bankruptcy filed.	Timing does not defeat § 525(a) claim; discrimination post-discharge is actionable.

Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (Rooker-Feldman doctrine limits federal review of state court judgments)
Kelly v. Robinson, 479 U.S. 36 (criminal restitution orders are excepted from discharge under § 523(a)(7); policy limiting bankruptcy interference with state penal judgments)
FCC v. NextWave Personal Communications, Inc., 537 U.S. 293 (§ 525(a) bars discrimination based solely on nonpayment of a dischargeable debt regardless of governmental regulatory motive)
Kawaauhau v. Geiger, 523 U.S. 57 (exceptions to discharge must be narrowly construed)
Middlebrook Plaza, LLC v. Ray (In re Ray), 624 F.3d 1124 (matters “arising under” the Bankruptcy Code are core proceedings)