CSDA Bankruptcy
Workshop
Presenters:
Jennifer Coultas, Los Angeles County
Child Support Services Department,
Jennifer_Coultas@cssd.lacounty.gov
Tex Ritter, Sierra Nevada Regional
Department of Child Support Services,
Tex.Ritter@co.nevada.ca.us
Daniel Bell, San Bernardino County
Department of Child Support Services,
dbell@css.sbcounty.gov
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Demystifying Bankruptcy
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Definitions
Language of bankruptcy
Types of bankruptcy
Resources
History
Child Support is First Priority Debt
type
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Bankruptcy is fun and easy
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Discharge/Dismissal
Trustee’s duties and obligations
Domestic Support Obligation
Automatic Stay in Bankruptcy
Proof of Claim
Types of Claims
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Bankruptcy is fun and easy
• Objections to Claims
• Objections to Plans
– Failure to provide for current support
– Failure to provide for child support
arrears
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Bankruptcy is fun and easy
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Situations
Employer files bankruptcy
Obligor files bankruptcy
Custodial parent files bankruptcy
Notification of Bankruptcy
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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
• Tax intercept, license suspension,
credit reporting and passport denial
are authorized
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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 authorized by judgment
or statute)
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Bankruptcy is fun and easy
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Objection to Claim
Objection to Plan
Relief from stay
Motion to avoid a lien
Adversary Proceedings
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Bankruptcy 201
• Advanced Bankruptcy
• Complex Proofs of Claim
• Various Child Support
Categories
• Multiple Cases
• Adding Interest to arrears
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Proof of Claim
• A claim is a right to payment. 11
U.S.C. § 101 (5).
• (5) 'claim' means - (A) right to
payment, whether or not such right
is reduced to judgment, liquidated,
unliquidated, fixed, contingent,
matured, unmatured, disputed,
undisputed, legal, equitable,
secured, or unsecured; or
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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
judgment.
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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 debtor.
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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
maintenance, support (including
public assistance) or alimony.
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11 U.S.C. § 523 (a)(5)
• Domestic Support Obligations and
interest on support obligations are
non-dischargeable in bankruptcy.
This change in the law makes is
clear that previous court decisions
allowing discharge of assigned
support or arrears are no longer
valid.
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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 the automatic stay. 362(b)(2)(E)
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11 USC Section 362(b)(2)(F)
• Intercepting a tax refund is not a
violation.
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Employer files Bankruptcy
• Notice to Withhold not honored
• Who gets credit?
• What not to do
• Who files the Proof of Claim
• Wages or Support
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Advanced Bankruptcy
• Objections to Claims
• Prima Facie filing
• Objection to Claim Motion
• The Proceeding
• Evidence
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Objection to Chapter 13 Plan
• The Plan does not provide for the
payment of support
• Object to confirmation
• Negotiate
• Child Support is nondischargeable
• Not proposed in good faith
• Require amendment to Plan
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Complex Issues
• Motions to Avoid a lien
• Recordings are judicial liens
• Child Support Exemption
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Violations of the Stay
• Automatic Stay in Bankruptcy
– What to do?
– What not to do?
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Adversary Proceedings
• Bankruptcy based law suit or legal
proceeding
• Core proceedings
• Non-core proceedings
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Relief from Stay
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Alter Ego Actions
Preferential Transfers
Fraudulent Conveyances
Discovery
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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
– How to negotiate
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Negotiations
• Review case
• Good Pay/Bad Pay
• NTW or income withholding order
or wage assignments are allowed
for current and arrears
• Income Ratios/Child Support
Obligation
• Trustee's fees (10%)
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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
Withholding Order or part NTW and
part Proof of Claim for arrears (with
knowledge and consent of debtor’s
attorney)
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Bankruptcy is fun and easy
• Procedure
• Telephonic hearings are authorized
• Electronic filing is required,
electronic docketing may be
required
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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
• In re Lebowitz (9th Cir. 2000) 217
F.3d 799
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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) 324 F.3d 539
• In re Gruntz , 202 F.3d 1074 (9th
Cir. 2000)
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Bankruptcy Exercise
Situation
Chapter
7
9 11 13
You can continue to collect child support.
Yes
Yes Yes
You can continue to collect arrears.
Yes
No
Discuss case options
Release a license
Once the Petition in Bankruptcy is filed,
you can send a wage assignment.
Yes Yes Yes Yes
You must release a property lien that was
filed prior to the debtor’s filing for
bankruptcy.
No
. No No No
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Bankruptcy Exercise
Situation
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 by filing of a bankruptcy.
Chapter
7
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11 13
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Yes Yes Yes Yes
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A
A
Yes Yes Yes Yes
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Bankruptcy Exercise
Situation
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 debtor to the bankruptcy court.
Chapter
7 9 11 13
Yes Yes Yes Yes
No No No No
Yes Yes Yes Yes
Yes Yes Yes Yes
Yes Yes Yes Yes
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Bankruptcy is fun and easy
• Thank you.
• Thank CSDA.
• Please fill out your comment
forms.
• Email if you have any questions.
• Tex.Ritter@co.nevada.ca.us
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Practical Bankruptcy Issues
The Devil is in the Details
Daniel L. Bell, San Bernardino
DCSS, dbell@css.sbcounty.gov
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Where do you find the law?
• Bankruptcy Code Manual – West’s
Bankruptcy Series
• Westlaw
• http://www.law.cornell.edu
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Where do you find BK
information?
• http://pacer.psc.uscourts.gov
• You will need a PACER account to
view documents online.
• Almost all Bankruptcy Courts
nationwide allow or require
electronic filing
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PACER Login/Start Screen
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Setting Enforcement Holds
• What holds are mandatory?
• What holds are discretionary?
• How do you decide?
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11 U.S.C. 362(b)
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11 U.S.C. § 362(b)
The filing of a petition under section 301, 302, or 303 of this title, or of an application under
section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay(1) under subsection (a) of this section, of the commencement or continuation of a criminal action
or proceeding against the debtor;
(2) under subsection (a)
(A) of the commencement or continuation of a civil action or proceeding(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of marriage, except to the extent that such proceeding seeks to
determine the
division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the
estate;
(C) with respect to the withholding of income that is property of the estate r property of the
debtor for payment of a domestic support obligation under a judicial or administrative order or a
statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or
occupational license, or a recreational license, under State law, as specified in section 466(a)(16)
of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as
specified in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social
Security Act or under an analogous State law; or
(G) of the enforcement of a medical obligation as specified under title IV of the Social Security
Act;….
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Criminal Complaints
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11 U.S.C. § 362(b)
The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of
the Securities Investor Protection Act of 1970, does not operate as a stay-
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(1) under subsection (a) of this section, of
the commencement or continuation of a
criminal action or proceeding against the
debtor;
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(2) under subsection (a)
(A) of the commencement or continuation of a civil action or proceeding(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the
division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate r property of the debtor for
payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational
license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified
in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security
Act or under an analogous State law; or
(G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….
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Summons & Complaints
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11 U.S.C. § 362(b)
The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of
the Securities Investor Protection Act of 1970, does not operate as a stay(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or
proceeding against the debtor;
(2) under subsection (a)
(A) of the commencement or continuation
of a civil action or proceeding•
(i) for the establishment of paternity;
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(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the
division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate r property of the debtor for
payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational
license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified
in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security
Act or under an analogous State law; or
(G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….
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Modifications
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11 U.S.C. § 362(b)
The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of
the Securities Investor Protection Act of 1970, does not operate as a stay(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or
proceeding against the debtor;
(2) under subsection (a)
(A) of the commencement or continuation of a civil action or proceeding(i) for the establishment of paternity;
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(ii) for the establishment or
modification of an order for domestic
support obligations;
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(iii) concerning child custody or visitation;
(iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the
division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate r property of the debtor for
payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational
license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified
in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security
Act or under an analogous State law; or
(G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….
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Income Withholding
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11 U.S.C. § 362(b)
The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor
Protection Act of 1970, does not operate as a stay(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor;
(2) under subsection (a)
(A) of the commencement or continuation of a civil action or proceeding(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the
division of
property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of
income that is property of the estate r
property of the debtor for payment of a
domestic support obligation under a
judicial or administrative order or a
statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or
a
recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the
Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State
law; or
(G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….
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Assets
• Don’t Do It.
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11 U.S.C. § 362(b)
The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not
operate as a stay(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor;
(2) under subsection (a)
(A) of the commencement or continuation of a civil action or proceeding(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the
division of property that is property of the
estate; or
(v) regarding domestic violence;
(B) of the collection of a
domestic support obligation
from property that is not
property of the estate;
(C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or
administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or
a recreational license, under State law,
as specified in section 466(a)(16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or
(G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….
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SLMS Suspension
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11 U.S.C. § 362(b)
The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor
Protection Act of 1970, does not operate as a stay(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor;
(2) under subsection (a)
(A) of the commencement or continuation of a civil action or proceeding(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the
division of
property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support
obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension,
or restriction of a driver’s license, a
professional or occupational license,
or a recreational license, under State
law, as specified in section 466(a)(16)
of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the
Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State
law; or
(G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….
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Credit Reporting
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11 U.S.C. § 362(b)
The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of
the Securities Investor Protection Act of 1970, does not operate as a stay(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or
proceeding against the debtor;
(2) under subsection (a)
(A) of the commencement or continuation of a civil action or proceeding(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the
division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate r property of the debtor for
payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational
license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act;
(E) of the reporting of overdue support
owed by a parent to any consumer reporting
agency as specified in section 466(a)(7) of the
Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security
Act or under an analogous State law; or
(G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….
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Tax Intercepts
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11 U.S.C. § 362(b)
The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of
the Securities Investor Protection Act of 1970, does not operate as a stay(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or
proceeding against the debtor;
(2) under subsection (a)
(A) of the commencement or continuation of a civil action or proceeding(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the
division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate r property of the debtor for
payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational
license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified
in section 466(a)(7) of the Social Security Act;
F) of the interception of a tax refund, as
specified in sections 464 and 466(a)(3) of the
Social Security Act or under an analogous
State law; or
(
(G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….
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HICA
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11 U.S.C. § 362(b)
The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of
the Securities Investor Protection Act of 1970, does not operate as a stay(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or
proceeding against the debtor;
(2) under subsection (a)
(A) of the commencement or continuation of a civil action or proceeding(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the
division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate r property of the debtor for
payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational
license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified
in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security
Act or under an analogous State law; or
(G) of the enforcement of a medical
obligation as specified under title IV of the
Social Security Act;….
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Proof of Claim
• Should you continue direct
enforcement?
• Should you file a Proof of Claim?
• Arrears Only – pay off balance in 35 years
• What about COAP?
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Proof of Claim Problems
• Interest continues to accrue on
Non-dischargeable debts
• Debtor will still have a balance
even though he makes all the
payments
• In re Groh Problem – Your claim
may push the debtor over the
unsecured debt limit in 11 U.S.C.
109(e)
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Proof of Claim
• Legal Actions – Bankruptcy Legal
Action – Add
• Can’t find it under Activities &
Forms.
• Attorney signs the Proof of Claim
• Caseworker signs the Proof of
Service
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Proof of Claim Problems
• The Proof of Service form in CSE is
fine as long as you happen to be
filing in the Southern District (San
Diego)
• Otherwise do Proof of Service
outside the system.
• Electronic Signature problems
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Disclaimer
• In re Jameson
• How can a non-dischargeable debt
be discharged in a bankruptcy
• Home-towned in Southern District
of Alabama
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Thanks for your Attention
• If you have questions, please feel
free to call or email.
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