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Domestic Support Obligation. Can I get interest on arrears or relief from stay?

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  • Domestic Support Obligation. Can I get interest on arrears or relief from stay?

    Sorry this is so long. I'm hoping you'll take the time to read it! I've tried to include all the facts I believe are legally relevant.

    To frame the question, my objective is to avoid being paid the $9116.54 I'm owed in alimony arrearages over the next 5 years without interest. I would consider it a successful result if1) I was awarded interest on the amount my ex owes or 2) I was given relief from the plan or objected to confirmation forcing him into a Ch7 so I could garnish his wages at 50%, levy his tax returns, and levy his $13K ring.

    In May of 2009, I got a judgment enforcing a separation agreement between myself and My ex for me to recieve lump-sum alimony to support me during the last year of school. In my state a judgment automatically places a lien against all realty and personalty of the judgment debtor. I did not record this judgment on the general execution docket until November 4, 2010 when a Fifa was issued and recorded.

    My ex made regular payments until December 2009 when he stopped making any payments. In January he filed a complaint for modification of alimony based on changed circumstances, alleging that he couldn’t find enough work and his expenses were too high to pay the debt. In support of the complaint my ex filed a Domestic Relations Financial Affidavit which showed that he had a negative income every month. Relying on this evidence, the Court did not order him to make payments and we began litigating the issue.

    During our marriage we bought a 2009 Nissan Altima with our joint assets. We paid $15K down and financed about $5K. Less than a year after buying the car with our money, my ex cheated on me and we got divorced. His bad acts are partly why my ex and I agreed to alimony in the first place. In February he claimed he still owed $4500 on the car (which I doubt since that was the original principal before any payments). After February my ex got rid of the car. I don’t know if he sold it or gave it to his wife or otherwise, but my ex no longer has the car. NADA currently values the car at $15K. Even if he still owed $5K on the car, my ex should have gotten $8K-10K in equity, which I had superior rights to as a judgment creditor with a lien on his personalty (including the car).

    Additionally, in February 2010 my ex purchased a diamond ring for $13K. My ex did not disclose this purchase to the Court at later hearings or in his February Domestic Relations Financial Affidavit. I don’t know where my ex got the money to buy the ring (it is possible my ex used the Nissan’s equity) but in his November 30, 2010 Ch.13 bankruptcy plan, my ex only owes $3K on the $13K ring.

    In May 2010 I appeared at Court for a hearing on the modification and his attorney informed me that My ex was out of town. His lawyer told me that I should settle because My ex has no money and that he sent My ex to a bankruptcy attorney. I later found out that my ex was out of town because he paid $3K-$4K for them to take a cruise. Then in August 2010 he purchased a 2010 Honda Accord Crosstour for $26K.

    In September I filed a complaint for contempt. At the hearing, my ex testified that he had no money to pay my judgment and that he had already seen a lawyer about filing bankruptcy. On cross-examination, he admitted that he has been insolvent since February 2010. The court ordered mediation which was unsuccessful.

    On November 30 he filed for Ch13 bankruptcy. His schedule E shows that he and his wife owes myself and another person $11,000 in arrears (though I have a Fifa showing my arrears to be $9116.51 rather than $7500). Despite acknowledging he has domestic support obligation arrears, my ex does not make any allowance to pay those arrears through the plan.

    I find the following facts should support relief but I cannot find any on which law to base my claim:
    • My ex has told myself and the Court, under oath and otherwise on several occasions that he is broke and has no money to pay the judgment against him. Yet my ex got equity for the Nissan, bought a $13K ring, paid for 2 cruises at $3K-$4K, and bought a new car at $26K. Is this fraud?
    • My ex has not accounted for the equity in the Nissan. He may be hiding it or already used it. As a judgment creditor I had a lien against that vehicle. Is there a way for me to recover the money he got for the car? Was his usage of the funds a bad faith attempt to delay, hinder, or defraud me as a creditor?
    • The law says Ch13 creditors should get in a Ch13 what they would receive in a Ch7. In a Ch7 I would get to levy his assets, garnish his wages, and otherwise get my money much sooner. Is that sufficient grounds to stop the Ch13 confirmation?
    • When we divorced my ex was debt-free. After our judgment, he incurred all the debt he has today and all the assets my ex claims as exempt. Can I get the trustee to avoid this as a preference?
    • My ex bought the ring, the car, and the cruise knowing he was insolvent and insisting to the Court that he was unable to pay the judgment. Is incurring this kind of debt while one knows they cannot afford them bad faith?

  • #2
    First and foremost, you better hire an attny. Your anger, which clearly shows through in this post, will turn off the bk Judge.

    Second, in a Chapter 13 Plan a debtor must provide for full payment of any delinquent DSO. Such obligation is deemed 1st priority, even ahead of debtor's legal fees. Unless the debtor is paying 100% to all creditors, interest on the past due DSO will continue to accrue (as permitted by State law) but will not be paid under the Plan. Assuming the debtor completes the Plan and obtains a discharge, the interest accrual will not be discharged.

    Third, the Judge is not going to lift the stay to allow you to "garnish wages". A debtor's wages, which are used to determine "projected disposable income" are devoted to the Plan and are property of the estate.

    Fourth, the attorney you hire will file an Objection to the Plan as it does not properly provide for the delinquent DSO. This will force an amended Plan that does provide for it.

    Fifth, be careful of how you approach your assertions that the debtor is either hiding assets, failed to disclose transactions and the like. I go back to my first comment. You are not in divorce court. The bk court does not want to hear the squabbles that routinely are raised in divorce court. While a debtor needs to disclose, disclose, disclose, it is also true that a "vindictive" ex-spouse needs to have restraint. If you come across as vindictive (hence the reason you should not represent yourself) you can bet the Judge will not take kindly to you.

    Des.

    Comment


    • #3
      Originally posted by despritfreya View Post
      Second, in a Chapter 13 Plan a debtor must provide for full payment of any delinquent DSO. Such obligation is deemed 1st priority, even ahead of debtor's legal fees. Unless the debtor is paying 100% to all creditors, interest on the past due DSO will continue to accrue (as permitted by State law) but will not be paid under the Plan. Assuming the debtor completes the Plan and obtains a discharge, the interest accrual will not be discharged.
      What if he IS paying 100%? Is there any way I can get interest?

      Comment


      • #4
        Originally posted by Advocate View Post
        What if he IS paying 100%? Is there any way I can get interest?
        See 11 USC 1322(a)(10). "A Plan may provide for the payment of interest. . .except that such interest may be paid only to the extent that the debtor has disposable income available to pay such interest after making provision for full payment of all allowed claims. . ."

        The payment of interest through the Plan on your claim is based upon:

        1. Debtor's Plan pays all allowed claims in full AND
        2. The Debtor chooses to provide payment of interest during the life of the Plan.

        Otherwise the unpaid interest will survive the discharge.

        Des.

        Comment


        • #5
          Originally posted by despritfreya View Post
          Otherwise the unpaid interest will survive the discharge.
          Des,
          Thank you for responding so quickly! This has been very difficult for me. I took your advice and talked to a lawyer and he said that interest stops when the bankruptcy is filed...

          I just want to make sure I understand you correctly. I know that he is paying a 100% chapter 13 plan and so all allowed claims will be paid in full. Are you saying he must either pay interest through the plan or it will continue to accrue outside of it? Do you know why the lawyer would say otherwise?

          I'm sorry I'm asking so many questions. I'm even more confused after talking with a lawyer who probably doesnt even know what he's talking about since he said I can't get interest.

          Comment


          • #6
            Originally posted by Advocate View Post
            I. . .talked to a lawyer and he said that interest stops when the bankruptcy is filed...I know that he is paying a 100% chapter 13 plan and so all allowed claims will be paid in full. Are you saying he must either pay interest through the plan or it will continue to accrue outside of it? Do you know why the lawyer would say otherwise?
            This may be jurisdiction (State) specific hence the comment by your attny. 11 USC 523(a)(5) excepts from Discharge any DSO. Since support is not subject to discharge if, under State law, one is entitled to interest on the support claim, it follows that said interest will continue to accrue and will not be dischargeable. This is so in my State.

            As earlier referenced, Section 1322(a)(10) gives the debtor the ability to provide for the interest if the debtor is paying 100% of all claims. He is not required to so provide. If he does not provide for the interest the interest accumulation will simply survive the discharge per 523(a)(5).

            The simplest way to verify if you are entitled to interest is to contact your State's Child Support Enforcement agency. Find someone in that agency who has dealt with Chapter 13's. In my State the agency is active in most cases where there is a delinquency and normally puts in a Notice of Appearance just to monitor what is going on.

            Des.

            Comment


            • #7
              Correction, you are dealing with spousal support, not child support. Sorry. But I think the interest will survive if allowed by State law. You can still check with the State agency but it may not know since it typically deals with child support.

              Sorry for the confusion.

              Des.

              Comment


              • #8
                I'll call them tomorrow. Thank you Des!

                Comment


                • #9
                  I am not law student but law is my favourite subject. I really like to read about law. In this thread I really like to read about what you people discussed. It is such a informative for all. I mean to say for law student and also for who suffering this kind of problem.

                  Comment

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