Domestic Support Obligations in Bankruptcy (Part One)
Written by Charleston Bankruptcy Lawyer, Russell A. DeMott At your bankruptcy hearing, you’ll be asked if you have a “domestic support obligation.” Just what is such a thing? The term was introduced by our relatively new bankruptcy law, BAPCPA (“Bankruptcy Abuse Prevention and Consumer Protection Act”). The definition is in §101(14A), which states:
The term ‘domestic support obligation’ means a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law, notwithstanding any other provision of this title,
(A) owed to or recoverable by: (i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or (ii) a governmental unit; (B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated; (C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of: (i) a separation agreement, divorce decree, or property settlement agreement; (ii) an order of a court of record; or (iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and (D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.”
In short, a domestic support obligation can generally be characterized as child support or alimony. Note that the Bankruptcy Code speaks of the obligation being “in the nature of alimony, maintenance or support” and that this is “without regard to whether such debt is expressly so designated.” This means that what the state court order calls it doesn’t control, so don’t judge a book by its cover. You must learn its “nature.” What was intended? What purpose was served by the provision? What was said on the record when the agreement was stated? What particular facts or circumstances exist to show its “nature”? As Judge Helen E. Burris explained in In re Poole; Case No. 07-03093 (D.S.C.):
Certain factors have been utilized as guidance to determine the nature of the obligation: (1) the substance and language of the document in question; (2) the financial condition of the parties at the time of the decree or agreement; (3) the function served by the obligation and intent of the parties at the time of the agreement; and (4) whether there is evidence to question the intent of a spouse or evidence of overbearing by either party.
In “Domestic Support Obligations (Part Two)”, I’ll address the reasons why you should care if an obligation is a domestic support obligation.