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New Federal Bankruptcy Law Contains Child Support Provisions

IM-05-05

Published: May 4, 2005
Information About:
State/Local Child Support Agencies
Topics:
Case Management, Enforcement
Types:
Policy, Information Memorandums (IM), Statutes/Legislation
Tags:
Bankruptcy

INFORMATION MEMORANDUM

IM-05-05

ATTACHMENT: 1) House Report 109-031 language regarding Part 1, Title II, Subtitle B “Priority Child Support”
2) Title II, Subtitle B “Priority Child Support” (sections 212-220) of Public Law 109-8 “The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

DATE: May 4, 2005

TO: ALL STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS APPROVED UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED PARTIES

SUBJECT: New Federal Bankruptcy Law Contains Child Support Provisions.

BACKGROUND:

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed by President Bush on April 20, 2005, and became Public Law 109-8. Title II, Subtitle B “Priority Child Support” contains a variety of provisions that will be helpful to States and families seeking to establish paternity and support orders and to enforce child support obligations. The revisions, among other changes:

  • Define a ‘domestic support obligation’;
  • Allow enforcement of support orders during bankruptcy proceedings;
  • Give domestic support obligations first priority in distribution of available funds;
  • Instruct bankruptcy trustees to provide appropriate written notice and certain information, including: to an obligee of the right to use the services of a state child support agency where the obligee resides; and to the obligee and child support agency of the bankruptcy proceedings, the claim for a domestic support obligation, and the granting of a discharge.

LEGISLATION:

Library of Congress’ Congressional Research Service Summary of P.L. 109-8 Child Support Provisions

(Sec. 212) Revises priority payment guidelines to place within the first priority claim category certain unsecured claims for domestic support obligations, if the funds received by a governmental unit are applied in a prescribed order. Grants priority over such claims, however, to specified administrative expenses of certain trustees.

(Sec. 213) Conditions court confirmation of a debt repayment plan under Chapters 11, 12 (Debts of a Family Farmer), and 13 upon certification that the debtor has paid in full all adjudicated domestic support obligations that become due after the petition filing date.

(Sec. 214) Excepts from an automatic stay specified actions pertaining to domestic support obligations proceedings, including: (1) child custody or visitation; (2) dissolution of marriage; (3) domestic violence; (4) withholding of income that is property of the bankrupt estate for payment of domestic support obligations; (5) suspension of drivers' licenses and professional licenses; (6) reporting of overdue support owed by a parent to certain consumer reporting agencies; (7) interception of specified tax refunds; and (8) enforcement of medical obligations under title IV, part D (Child Support and Establishment of Paternity) of the Social Security Act.

(Sec. 215) Revamps guidelines governing the nondischargeability of certain debts for alimony, maintenance, and support to repeal the exceptions granted the debtor under specified conditions.

(Sec. 216) Modifies guidelines governing property exempt from the bankruptcy estate to declare such property liable for a debt arising from domestic support obligations.

(Sec. 217) Prohibits the bankruptcy trustee from avoiding a transfer that is a bona fide payment of a debt for a domestic support obligation.

(Sec. 218) Excludes income payments for post-petition domestic support obligations from "disposable income" for purposes of a Chapter 12 confirmation plan.

(Sec. 219) Sets forth the duties of the bankruptcy trustee to notify the claim holder and the appropriate State child support agency of the debtor's last known address.

(Sec. 220) Declares dischargeable any debts for certain qualified educational loans which, if not discharged, would impose an undue hardship upon either the debtor or the debtor's dependent.

INQUIRIES: Please direct inquiries to ACF Regional Administrators

David H. Siegel
Acting Commissioner
Office of Child Support Enforcement