South Carolina Lawyer
SC Lawyer, July 2008, #1.
Domestic Support Obligations in the Bankruptcy Briar Patch
South Carolina LawyerJuly 2008Domestic Support Obligations in the Bankruptcy Briar PatchBy George L. Clauer IIIRemember the fable in which angry Brer Fox decides between several ways to painfully do in Brer Rabbit? Brer Fox heard the rabbit's pitiful but disingenuous pleas not to be thrown into the briar patch. Trying to do the worst thing he could do, Brer Fox happily threw Brer Rabbit deep into the briar patch only to find out what Brer Rabbit already knew. For Brer Rabbit, the briar patch was a very good place to be.
A fox-like parent/ex-spouse who owes alimony, maintenance or support might hear similarly disingenuous pleas not to be thrown into the bankruptcy briar patch from his support-creditor rabbit. That's because today's wise support-creditor rabbit knows that being in the recently amended bankruptcy briar patch can substantially increase her ability to collect the support debt.
The bankruptcy briar patch has always been a fairly friendly place for domestic support creditors. Debts for alimony, maintenance and support were automatically not discharged in a personal bankruptcy case under both the Bankruptcy Act of 1898, ch 541,§17(a), 30 stat. 544, 550-51(1898) and the 1978 Bankruptcy Code, Pub.L. 95-598, §523(a)(5), 92 stat. 2549 (codified as amended at 11 U.S.C. § 523(a)(5)(2000)).
In addition, under the 1978 Bankruptcy Code, in cases where there were assets to distribute to creditors, claims for alimony, maintenance or support were given a relatively high priority in payment - ahead of general unsecured claims but after tax claims and after the cost of the administration of the case. 11 U.S.C. §507(a)(7) (2000) (current version at 11 U.S.C.§ 507(a)(7) (Supp.V 2005). Claims for marital property distribution debts did not have any special priority and were always general unsecured claims under the Bankruptcy Code.
The assets that could be used to pay creditors under the 1978 Bankruptcy Code were always those available only after the debtor was granted his allowable exemptions. 11 U.S.C. §522(b)(1)(2000) (current version at 11 U.S.C. § 522 (Supp. V 2005)). Congress allowed the states to require their citizens with a sufficiently long residence in the state to use only state exemptions in bankruptcy cases. 11 U.S.C. §522(b)(3)(A)(Supp. V 2005). Under S.C. Code Ann. §15-41-35, South Carolinians are only allowed in their bankruptcy cases the same exemptions from seizure provided under South Carolina...