Bankruptcy &
Foreclosure
WiCSec Bankruptcy Workshop
Tex Ritter, Director, Sierra Nevada
Regional Department of Child Support
Services
[email protected]
Don Garrison, Managing Attorney,
North OKC Child Support Office
Demystifying Bankruptcy
Definitions
Language of bankruptcy
Types of bankruptcy
Resources
History
Bankruptcy is fun and easy
Discharge/Dismissal
Trustee’s duties and obligations
Domestic Support Obligation
Automatic Stay in Bankruptcy
Proof of Claim
Bankruptcy is fun and easy
Discharge/Dismissal
Trustee’s duties and obligations
Domestic Support Obligation
Automatic Stay in Bankruptcy
Proof of Claim
Bankruptcy is fun and easy
Objections to Claims
Objections to Plans
Failure to provide for current support
Bankruptcy is fun and easy
Situations
Employer files bankruptcy
Obligor files bankruptcy
Bankruptcy is fun and easy
Discharge in bankruptcy
Domestic Support obligations are not
discharged
Notice to Withhold is authorized
National Medical Support Notice is
authorized
Bankruptcy is fun and easy
File a proof of claim? Or Not?
Depends on the circumstances
Let’s make a deal
Include unliquidated amounts
(unreimbursed medical, child care, school
expenses, recreational expenses if
Bankruptcy is fun and easy
Objection to Claim
Objection to Plan
Relief from stay
Bankruptcy is fun and easy
Objection to Claim
Objection to Plan
Relief from stay
Bankruptcy 201
•
Advanced Bankruptcy
•
Complex Proofs of Claim
•
Various Child Support Categories
•Multiple Cases
Proof of Claim
A claim is a right to payment. 11 U.S.C. §
101 (5).
(5) 'claim' means - (A) right to payment,
Proof of Claim
A claim is a right to payment. 11 U.S.C. §
101 (5).
(5) 'claim' means - (A) right to payment,
Proof of Claim
A claim in bankruptcy could be the right to
collect unliquidated, but accrued,
unreimbursed medical expenses or
educational expenses or reimbursement of child care costs not yet reduced to a
11 U.S.C. § 101 (12A)
'debt for child support' means a debt of a kind
specified in section 523(a)(5) of this title for maintenance or support of a child of the
11 USC Section 101(14A)
“Domestic Support Obligation” is a debt
owed to a spouse, child, parent of a child or a governmental agency in the nature of
11 U.S.C. § 523 (a)(5)
Domestic Support Obligations and interest on
11 USC Section 362(b)(2)(C)
Income Withholding, Notice to Withhold
Income, Earnings Assignments Orders,
National Medical Support Assignments do not violate the automatic stay. 362(b)(2)(G)
Revoking a professional or driver’s license
does not violate the automatic stay.
Reporting to credit bureaus does not violate
11 USC Section 362(b)(2)(F)
Employer files Bankruptcy
•
Notice to Withhold not honored
•
Who gets credit?
•What not to do
Advanced Bankruptcy
•
Objections to Claims
•
Prima Facia filing
•
Objection to Claim Motion
•The Proceeding
Objection to Chapter 13 Plan
•
The Plan does not provide for the
payment of support
•
Object to confirmation
•Negotiate
•
Child Support is non-dischargeable
•Not proposed in good faith
Complex Issues
Motions to Avoid a lien
Violations of the Stay
Automatic Stay in Bankruptcy
What to do?
Adversary Proceedings
Bankruptcy based law suit or legal
proceeding
Core proceedings
Relief from Stay
•
Alter Ego Actions
•
Preferential Transfers
•
Fraudulent Conveyances
Negotiations
Typical scenario You receive Notice Chapter 13 filed Contact Debtor’s attorney
Next step?
File a Proof of Claim
Do not file a Proof of Claim
Negotiations
Review case Good Pay/Bad Pay
NTW or income withholding order or wage
assignments are allowed for current and arrears
Negotiations
Modify Plan to allow for payment of child
support and arrears outside of Plan (or part in Plan) and list debt as non-dischargeable
Sent Notice to Withhold or Income
Bankruptcy is fun and easy
Procedure
Telephonic hearings are authorized
Bankruptcy is fun and easy
In re Garrett (E.D. Tex 2005) 315 B.R. 431 In re Charnock (9th Cir. BAP 2004) 318
B.R. 720
In re Cervantes (9th Cir. 2000) 219 F.3d
955
Bankruptcy is fun and easy
In re Coker (C.D. CA. 1998) 232 B.R. 182 In re Pacana (9th Cir. BAP 1991) 125 B.R.
19
In re Donald Clifford Foster (9th Cir. 2003)
319 F.3d 495
In re: Wayne K. Crawford (7th Cir. 2003)
Bankruptcy Exercise
Chapter
Situation 7 9 11 13 You can continue to collect child support. Yes
You can continue to collect arrears. No
Release a license
Once the Petition in Bankruptcy is filed, you can send a wage assignment.
Yes
You must release a property lien that was filed prior to the debtor’s filing for bankruptcy.
No No No No
Discuss case options
Yes Yes
Yes
Yes Yes Yes
Bankruptcy Exercise
Chapter
Situation
7 9 11 13
Repossessions are allowed.
You can continue action to establish paternity.
You can use a Civil Contempt proceeding to enforce the payment of debt.
An action to modify support is not affected
.
Yes Yes Yes Yes
Bankruptcy Exercise
Chapter
Situation 7 9 11 13 Credit reporting is allowable.
You can file or record an Abstract of Support Judgment.
You cannot negotiate an SLMS stipulation or inquire about payment on arrears.
You cannot contact the debtor to find out when the next payment will be made.
If the debtor requests a lien be lifted, refer the
Yes Yes Yes Yes No No No No
Yes Yes Yes Yes
Upon Notice of Chapter 7
Most are “no asset” cases and say that
creditors should NOT file Proofs of Claims
If Notice says to file a Proof of Claim, by
all means do so. The trustee has found assets and we want our share
Wage withholding/income assignment
Upon Notice of Chapter 13
Look at the Plan. Arrears should be
listed as a priority claim.
Current support may or may not be
included in plan. Often it is not.
Call the debtor’s attorney and reach
agreement on payments inside/outside the Plan
Chapter 13 (cont.)
Wage withholding/income assignment
can often remain for current support
only, with arrears paid through the Plan
If arrears are paid through Plan you
Chapter 13 Issues
DANGER, WILL ROBINSON!!
In some Circuits, there is precedent for a
confirmed Plan controlling even if it violates a statute
If Plan omits child support completely, or
mis-states the balance or interest- TAKE NOTE!
Foreclosures
Foreclosures vary widely from state to
state, workers must be guided by their attorneys
With declining property values, many
Bankruptcy is fun and easy
Thank you.
Thank WiCSec.
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