Published on:

Child Support and Spousal Maintenance Obligations Are Not Dischargeable in Bankruptcy

hotblack from morguefile.comBankruptcy under Chapter 7 or Chapter 13 gives a debtor the opportunity to discharge certain debts at the conclusion of the case. Certain debts, however, are never subject to discharge in any bankruptcy proceeding. This includes debts incurred as part of a “domestic support obligation,” such as child support or alimony. 11 U.S.C. § 523(a)(5). Congress originally applied this exception to discharge only to debts owed directly to a spouse, former spouse, or child, but it has since expanded this definition. California courts have similarly interpreted it broadly, balancing the need of the debtor for a “fresh start” with the needs of the support beneficiaries.

The exception to discharge of “domestic support obligations” was originally worded so that it applied solely to a debtor’s “spouse, former spouse, or child.” In re Ashworth, No. 8:11-bk-10946, mem. decision (Bankr. C.D. Cal., Oct. 1, 2012). This led to challenges to the nondischargeability of debts sought by a parent who was never married to the debtor, or a government agency seeking to recover unpaid support or maintenance. Congress replaced the language in § 523(a)(5) with “domestic support obligation” in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It also substantially expanded the definition of “domestic support obligation” to include debts recoverable by a governmental entity; a debtor’s spouse, former spouse, or child; or the other parent of a debtor’s child. 11 U.S.C. § 101(14A).

The Ninth Circuit addressed the question of domestic support obligations that did not fit the previously-defined exclusion, finding that the nature of the debt as a support obligation mattered more than the specific identity of the creditor. In re Chang, 163 F.3d 1138, 1142 (9th Cir. 1998). The case involved a debtor in a Chapter 13 proceeding who sought discharge of a debt owed to the other parent of her child, to whom she was never married. The debt included court-ordered child support and fees payable to a court-appointed guardian ad litem. The Bankruptcy Appellate Panel (BAP) ruled that the debt was dischargeable, because the creditors were neither the spouse nor the former spouse of the debtor. Id. at 1140. The Ninth Circuit reversed the BAP, citing precedent from other circuits that looked to the debt itself, rather than the creditor, to determine whether the debt was “for the child’s benefit and support.” Id. at 1141 (internal quotations omitted). After Congress amended § 523, it better reflected the holdings of cases like Chang.

Bankruptcy offers relief to people find themselves unable to keep up with their debt payments with their current income. A Chapter 13 bankruptcy gives a person the opportunity to restructure the payments on their debts for a defined period of time, during which they can hopefully pay down a substantial amount of the total. At the end of this repayment period, the court may discharge the remainder of those debts entirely. Bankruptcy attorney Devin Sawdayi has sixteen years’ experience representing debtors in the Los Angeles area who need the protection of the bankruptcy system. To schedule a free and confidential consultation about your case, please contact us today online or at (310) 475-9399.

More Blog Posts:

Payroll Debts Ruled Nondischargeable in Chapter 7 Bankruptcy, Los Angeles Bankruptcy Lawyer Blawg, July 23, 2013

Ninth Circuit Allows Partial Discharge of Student Loan Debt, Los Angeles Bankruptcy Lawyer Blawg, July 12, 2013

Discharge of Federal Tax Debt in Bankruptcy, feat. Willie Nelson, Los Angeles Bankruptcy Lawyer Blawg, June 10, 2013

Photo credit: hotblack from morguefile.com.