Under prior bankruptcy law, a key concept was “alimony, maintenance and support” owed to a “spouse, former spouse or child of the debtor” and “not assigned to another entity, whether voluntarily, involuntarily or by operation of law.” To constitute “alimony, maintenance or support,” the obligation had to be in the nature of support as opposed to a property settlement debt.
The 2005 amendments to the US Bankruptcy Code continue to distinguish between support debts on one hand, and property settlement debts on the other. However, the amendments clarify and broaden the concept of “alimony, maintenance and support” by introducing a new bankruptcy term, “domestic support obligation” (hereinafter, “DSO”) and referring to it consistently throughout the amended Code. An obligation must be in the nature of support to constitute a DSO. See 11 U.S.C. Section 523. That term includes both pre-petition and post-petition alimony and support as well as interest under applicable nonbankruptcy law. A DSO includes support obligations established before, on or after the bankruptcy case is commenced. In addition to obligations owed to the debtor’s spouse, former spouse or child, or assigned to governmental units as described above, a DSO includes debts owed to the child’s parent, legal guardian or responsible relative, as well as governmental and nongovernmental units if voluntarily assigned for purpose of collection. Section 101(14A) of the US Bankruptcy Code.
The 2005 amendments make many important changes to enhance enforcement of domestic relations rights and responsibilities. Domestic relations creditors get broad immunities from the automatic stay. In addition, the amendments establish a comprehensive set of provisions to enhance the enforcement and collection of DSOs even while the bankruptcy case is pending. First, all DSOs will have first-priority status. However, within that first-priority category, highest priority goes to a trustee’s administrative expenses in finding and liquidating assets to pay DSOs. Second, failure to make ongoing DSO payments is a ground for conversion or dismissal in chapter 13. Third, plans under chapter 13 can be confirmed only if they propose full payments of pre-petition DSO claims entitled to first priority. Fourth, such plans can be confirmed only if the debtor is current on post-petition DSO payments. Fifth, the court may not grant a discharge in chapter 13 unless the debtor certifies that the debtor is current in all post-petition DSO payments and has made all DSO payments called for under the plan. Sixth, trustees under all chapters must inform DSO claimants about the resources available to them to collect their claims and of their rights under the Code. Consequently, the bankruptcy court has become an important conduit in the enforcement and collection of support obligations. Source: American Bankruptcy Institute.
Warmest Regards,
Bob Schaller
Your Bankruptcy Advisor Blog
By: Attorney Robert Schaller (Bob's bio) of the Schaller Law Firm
Bob is a member of the National Bankruptcy College Attorney Network, American Bankruptcy Institute and the National Association of Consumer Bankruptcy Attorneys.
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Monday, September 21, 2009
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