Collecting alimony and child support in some cases is very difficult. So what is a person to do when the payor of alimony files bankruptcy? How do you collect the money? A recent case explains what can be done outside of bankruptcy court.
Alimony and child support are called “domestic support obligations” under bankruptcy law. These are treated as a
protected category of debt under the bankruptcy code. The person
filing bankruptcy must disclose the existence and status of domestic support obligations when filing bankruptcy. Failure to
accurately provide this information may result in a dismissal of the
court must address any arrears for any domestic support obligations
as part of the bankruptcy process. However, the recipient of alimony
is not limited to trusting the filing by the debtor. They can take
some actions. The ability to take actions is limited with
severe sanctions for taking an improper action. Bankruptcy sanctions are aimed at the person who brought an action in
state court and who asked the family court judge to take an action
against the debtor.
In the recent case of In re Claudinei
Bankruptcy Case No. 11-40315-MSH (BAP 1st
Circuit 2013) the recipient of alimony payments filed a contempt in
family court. The contempt resulted in a finding that the debtor had
failed to pay alimony and he was arrested and held in jail until he
paid money as ordered by the state court. The Bankruptcy Appeals
Court held that the spouse who filed the contempt violated bankruptcy
law and was subject to sanctions for her actions. Specifically, the
Court found that the spouse could not file a contempt and could not
have the debtor arrested.
a person files bankruptcy and owes alimony there are five things that
can be done by the spouse or ex-spouse relating to alimony. Three of
these are in state court and two are in bankruptcy court.
to the Desouza decision, the following are three actions that a
person can take in state court regarding alimony after the other
spouse has filed bankruptcy: First, the person can ask state court
to establish or modify of an order for alimony. Second
the person can ask state court to collect alimony from property that
is not property of the bankruptcy estate. Finally the person can ask
the state court to withhold income that is property of the bankruptcy
estate or other property of the debtor for payment of alimony.
In addition to
the three actions that can be taken in state court, there are two
actions that can be taken in bankruptcy court: An appearance can be
filed listing the money owed for alimony and an adversary proceeding
can be filed seeking the right to take other actions in state court
such as filing a contempt.
order for alimony can occur in a divorce proceeding or a modification
of divorce action. Filing either of these actions or prosecuting
them does not violate the automatic stay of bankruptcy court.
alimony from property that is not the property of the bankruptcy
estate can be risky. The problem is to determine what property is
not part of the bankruptcy estate. Any mistake can have serious
consequences for the recipient of alimony. It is best to have the
advice of a bankruptcy attorney before trying to determine what is
included in the bankruptcy estate.
requesting Family Court to issue an order to withhold income for the
purpose of paying alimony is not a simple matter if you can't file a
contempt. Unlike child support, the Department of Revenue won't
collect alimony and won't use their administrative powers to withhold
income. The normal procedure in which to ask the court to order the
collection of alimony is a contempt action. However, a contempt
can't be filed without permission of bankruptcy court. An attempt to
withhold income can be made in a divorce or modification action.
Based on my experience in Massachusetts Courts, the court is unlikely
to order such relief without a contempt action.
instances, it is best to seek remedies in both state court and
bankruptcy court. Bankruptcy court requires that a person who files
bankruptcy to file an affidavit that sets forth an obligation to pay
alimony and to certify if the payments are current. The recipient of
alimony has the right to file an appearance in bankruptcy court that
details the same information. The proper form to use is B 281. If
there is a difference between the filing by the debtor and the
recipient of alimony, then the Trustee in Bankruptcy should take
steps to determine the correct amounts. If the bankruptcy estate has
assets, then the Trustee should take additional actions to pay the
alimony. Form B 281 can be filed by a person or their attorney.
Once filed, it gives the person the ability to participate in the
The other action
that can be taken is to file an adversary proceeding in bankruptcy
court and ask the court for permission to take additional actions in
state court. The bankruptcy code spells out when it is appropriate
to file such an action. A bankruptcy attorney should be hired before
starting an adversary proceeding.
When it comes to
bankruptcy matters, state court won't provide bankruptcy advice and
may take actions that are prohibited by bankruptcy law. This is a
complicated area of law. I recommend that if the payor of alimony
files bankruptcy that the recipient should consult an experienced
divorce lawyer and perhaps also consult with a bankruptcy attorney.