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The Intersection of Family Law and Bankruptcy - Look Both Ways Before Crossing - FEATURE | FAMILY LAW - Colorado Bar Association
FEATURE | TITLE
          FAMILY LAW

                       The
                   Intersection
                    of Family
                     Law and
                   Bankruptcy
                              Look Both Ways Before Crossing
                                                    BY PET E R CA L A N D JOR DA N F OX

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The Intersection of Family Law and Bankruptcy - Look Both Ways Before Crossing - FEATURE | FAMILY LAW - Colorado Bar Association
This article discusses the treatment of domestic support obligations in bankruptcy cases.

W                                                                         “
                    hen handling dissolution of                                                       erally isn’t subject to the automatic stay, but
                    marriage cases, expertise in                                                      collection of section 523(a)(15) debts is subject
                    both family law and bank-                                                         to the automatic stay. Third, a DSO is treated
                    ruptcy law is necessary to
maximize a client’s recovery and avoid sig-
                                                            The Bankruptcy                            as a first priority claim and is paid before other
                                                                                                      unsecured claims.
nificant risks.                                            Code creates two                               Section 101(14)(A) of the Bankruptcy Code

                                                             categories for
     This article addresses critical issues a prac-                                                   defines a DSO as a debt that is owed to a spouse,
titioner must navigate when a client’s spouse                                                         a former spouse, or a child of the debtor that
or ex-spouse files a bankruptcy case before or
after entry of a divorce decree. It explains key
                                                             debts incurred                           is in the nature of alimony, maintenance, or
                                                                                                      support and is established by a separation
concepts necessary to understanding options                     in divorce                            agreement, divorce decree, property settlement

                                                              proceedings:
in the family law context after a bankruptcy                                                          agreement, or court order. Whether a debt is a
filing and discusses                                                                                  DSO is determined by federal bankruptcy law,
     ■■ the scope of the automatic stay and when
        a motion for relief from stay should be
                                                              (1) DSOs (11                            not state law.3 To determine whether a debt is a
                                                                                                      DSO, the bankruptcy court analyzes the shared
        filed;                                                USC section                             intent of the parties and whether the obligation,

                                                            523(a)(5)); and
     ■■ abstention;                                                                                   in substance, was support or in the nature of
     ■■ the scope of the discharge under different                                                    support. In determining the parties’ intent,
        chapters of the Bankruptcy Code;
     ■■ plan confirmation issues and strategies
                                                              (2) any other                           the bankruptcy court looks to the underlying
                                                                                                      agreement itself, as well as the surrounding
        to maximize recoveries in the event of a             debt incurred                            circumstances, such as employment status,
        bankruptcy filing; and                                                                        level of education, and the need for support.
     ■■ best practices for crafting a state court              in a divorce                               Regardless of how the parties label the obli-
        dissolution and support order when a
        future bankruptcy filing is expected.                proceeding (11                           gation, if it has the practical effect of providing
                                                                                                      support, the obligation is a DSO.4 The Tenth

Key Concepts
                                                              USC section                             Circuit has held that the term DSO is entitled
                                                                                                      to a broad application.5 DSOs can include not
Whether a debt is a domestic support obligation            523(a)(15) debts).                         only payments to the former spouse, but also
(DSO), what assets are property of the bank-                                                          payments to third parties that have the practical

                                                                          ”
ruptcy estate, and the chapter of the Bankruptcy                                                      effect of reducing the former spouse’s living
Code1 under which the debtor seeks relief are                                                         expenses. For example, an obligation owed
critical to determining whether the automatic                                                         to a credit card company to pay a joint credit
stay applies and whether a debt is dischargeable                                                      card debt of a former spouse6 or an obligation
in a bankruptcy case.                                                                                 to pay a mortgage and hold the former spouse
                                                      other debt incurred in a divorce proceeding     harmless from the obligation to pay the mortgage
DSOs and Other Debts                                  (11 USC section 523(a)(15) debts).2             can both be characterized as DSOs.7 DSOs
In a bankruptcy case filed after a divorce pro-           DSOs have greater protection in the Bank-   can also include attorney fees incurred in a
ceeding, it is critical to understand the different   ruptcy Code than other debts incurred in a      state court proceeding related to the receipt
treatment provided for the various types of           divorce proceeding in three important ways.     or enforcement of DSOs.8
debts incurred in the divorce proceeding.             First, DSOs cannot be discharged under any          In sum, bankruptcy courts may have a
The Bankruptcy Code creates two categories            Bankruptcy Code chapter, but section 523(a)     broader view of what qualifies as a DSO than
for debts incurred in divorce proceedings: (1)        (15) debts can be discharged in a chapter 13    a family law attorney initially may expect. For
DSOs (11 USC section 523(a)(5)); and (2) any          proceeding. Second, collection of DSOs gen-     example, what may appear to be a property

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The Intersection of Family Law and Bankruptcy - Look Both Ways Before Crossing - FEATURE | FAMILY LAW - Colorado Bar Association
FEATURE
FEATURE || TITLE
           FAMILY LAW

transfer under state law could, under certain
circumstances, be a DSO in a bankruptcy case.
                                                                                PRACTICE TIPS FOR
Property of the Bankruptcy Estate                                         HANDLING BANKRUPTCY ISSUES
The Bankruptcy Code defines property of the                                 IN DIVORCE PROCEEDINGS

                                                               1
estate very broadly to encompass all legal or
                                                                  Consult with competent bankruptcy counsel. The rules of the bankruptcy
equitable interests of the debtor in property as
                                                                  court are unique and do not necessarily follow the standard pathways in
of the commencement of the bankruptcy case,9
                                                               the domestic arena.
with a few exceptions not relevant to this article.
In a chapter 7 case, property of the bankruptcy
estate does not include post-petition earnings                 2   File a motion for relief from stay even if you think you are dealing with
                                                                   a DSO. This is a situation where it is better to ask for permission than to
                                                               beg for forgiveness.
or other property acquired by the debtor after

                                                               3
the bankruptcy filing.10 However, in chapter 11                    To the maximum extent possible, characterize the obligations imposed
and 13 cases, property of the bankruptcy estate                    by the divorce orders as in the nature of support and provide the bank-
does include property acquired post-petition                   ruptcy court with as much information as possible about the state court’s
and post-petition earnings.11                                  and the parties’ intent. Where appropriate, state the facts regarding how the
                                                               order reduces the creditor spouse’s monthly expenses and note that absent
The Different Chapters                                         a particular order, the court would have granted a higher or longer support
of the Bankruptcy Code                                         order.

                                                               4
The property that is included in the bankrupt-
                                                                    Where possible, secure the spouse’s obligation to make a payment or
cy estate and the availability of a discharge
                                                                    property transfer with a security interest in the relevant property.
vary under the different Bankruptcy Code
chapters. It is thus important to identify at the
commencement of the bankruptcy case the                        5    Consider including language in a settlement agreement that permits
                                                                    the parties to return to the domestic court to adjust support payments
                                                               in the event a spouse fails to meet his obligations with respect to property
Bankruptcy Code chapter under which the
debtor has chosen to file.                                     allocations.

                                                               6
    In general, an individual with few unen-                       Again, consult with competent bankruptcy counsel!
cumbered assets who wants a discharge files a
chapter 7 bankruptcy case. There are, however,
limits on the amount of income an individual
can earn and still be eligible for chapter 7 relief.12
Subject to certain debt limits, an individual with       is paid through a plan on the same basis as          The protection of the automatic stay is broad,
regular income can file a chapter 13 bankruptcy          other unsecured claims and is discharged         and exceptions to the automatic stay are applied
case.13 In the chapter 13 case, an individual seeks      when plan payments are complete, but a DSO       narrowly.15 The consequences to the client
to confirm a plan and pay his creditors from             is not discharged. Under chapters 7, 11, and     and the attorney for violating the automatic
disposable income over a period of three to five         12, DSOs and section 523(a)(15) debts are not    stay can be severe. Any act in violation of the
years. Chapter 11 is also available to individuals       discharged.                                      automatic stay is void, even where there is no
seeking to reorganize and is generally used                                                               notice of the bankruptcy filing.16 An individual
where the individual does not satisfy chapter            The Automatic Stay                               injured by a willful violation of the automatic
13’s debt limits or is not eligible for a chapter 7      Among other things, a bankruptcy filing stays    stay can recover actual damages, including
case based on his income level. Chapter 12 is              1. the commencement or continuation of         costs and attorney fees. The award of actual
available for family farmers seeking to reorganize            litigation against the debtor;              damages is mandatory.17 Punitive damages
through a plan.                                            2. the enforcement of a judgment obtained      also can be awarded.18
                                                              before the commencement of the bank-            There are exceptions to the automatic stay
Scope of Relief                                               ruptcy case against either the debtor or    for certain types of family law proceedings.
For debts incurred in a divorce proceeding,                   property of the bankruptcy estate;          The automatic stay does not apply to the com-
the scope of the discharge differs depending               3. any act to exercise control over property   mencement or continuation of a civil action
on the Bankruptcy Code chapter under which                    of the bankruptcy estate; and                   ■■ to establish paternity;
the debtor files a bankruptcy case. In a chapter           4. any act to collect, assess, or recover a        ■■ to establish or modify an order for a DSO;
13 case, a section 523(a)(15) debt typically                  pre-petition claim against the debtor.14        ■■ concerning child custody or visitation;

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The Intersection of Family Law and Bankruptcy - Look Both Ways Before Crossing - FEATURE | FAMILY LAW - Colorado Bar Association
“
    ■■ to dissolve a marriage, except to the ex-                                                          tempt proceeding is criminal is the purpose
       tent the dissolution proceeding seeks to                                                           and character of the sanctions imposed against
       determine the division of property that is                                                         the contemnor.30 If the contemnor can purge
       property of the estate; or
    ■■ regarding domestic violence.19
                                                                Further, the                              the contempt by paying the judgment, the
                                                                                                          proceeding is a civil contempt proceeding
    Further, the automatic stay does not apply to
the collection of a DSO from property that is not
                                                              automatic stay                              and is subject to the automatic stay.31 For a
                                                                                                          contempt proceeding to be criminal, a trial
property of the estate,20 to a wage garnishment,21            does not apply                              court must find that the contemnor acted

                                                             to the collection
or to a criminal proceeding against the debtor,                                                           willfully in refusing to pay (that is, she had
including a criminal contempt proceeding                                                                  knowledge of the order and the ability to pay
brought to enforce a pre-petition order of the
state court.22
                                                              of a DSO from                               the debt but nevertheless failed to do so).32
                                                                                                          Particularly in a chapter 11 or 13 case, where
    A creditor must notify the state court in a               property that is                            property of the estate includes post-petition

                                                            not property of the
pending proceeding of the bankruptcy filing.                                                              earnings, it is less likely the contemnor would
This is often done by filing a “Suggestion of                                                             have assets that could be used to pay the DSO.
Bankruptcy.” A creditor must also affirmatively
cease all collection efforts, including taking
                                                             estate, to a wage                            Once again, relief from the stay could be sought
                                                                                                          in the bankruptcy court to avoid any doubts
steps to withdraw an income assignment or                      garnishment,                               as to the application of the automatic stay in

                                                              or to a criminal
wage garnishment if it involves the collection                                                            a contempt proceeding.
of section 523(a)(15) debts.23                                                                                If there is any doubt whether the automatic

When is a Debt a DSO?
                                                                proceeding                                stay applies, a motion for relief from the auto-
                                                                                                          matic stay should be filed with the bankruptcy
As stated above, whether a debt created by a                against the debtor,                           court.33 The motion should seek a ruling that the
divorce decree is a DSO is determined by the                                                              automatic stay does not apply or, alternatively,
intent of the parties and the court’s consideration             including a                               seek relief from the automatic stay if the court
of the surrounding circumstances. The Tenth
Circuit has stated that the label attached to an
                                                            criminal contempt                             finds the automatic stay does apply.34

obligation does not control, even if the relevant
agreement is unambiguous.24 In short, whether a
                                                                proceeding                                Relief from Stay
                                                                                                          Relief from the stay is sought by filing a motion
debt is a DSO raises inherently factual issues.25 In        brought to enforce                            in the bankruptcy case.35 Typically, a decision

                                                               a pre-petition
addition, even when the debt is a DSO, collection                                                         will be made in 30 to 60 days.36 Where neces-
of the DSO is stayed upon the filing of a bank-                                                           sary, relief from the stay can be sought on an
ruptcy case, unless collection is from property
that is not property of the bankruptcy estate
                                                                order of the                              emergency basis.37 It is a summary proceeding
                                                                                                          determined on an expedited basis. Accordingly,
or is based on a DSO wage garnishment.26 For                    state court.                              the bankruptcy court does not rule on the merits
these reasons, it is often more judicious to seek                                                         of the claims.38

                                                                            ”
relief from the automatic stay before proceeding                                                              Under section 362(d)(1) of the Bankruptcy
in the pending state court divorce proceeding.                                                            Code, relief from stay “shall be granted” for
                                                                                                          cause. Because “cause” is not defined in the
State Court Contempt Proceedings                                                                          Bankruptcy Code, relief from stay for cause “is
Bankruptcy courts generally refer to contempt                                                             a discretionary determination made on a case
proceedings as civil (which are subject to the                                                            by case basis.”39 To determine whether cause
automatic stay) and criminal (which are not            bankruptcy case, a former spouse should ensure     exists to lift the automatic stay, bankruptcy
subject to the automatic stay). Colorado state         that the trial court makes appropriate findings    courts “apply a balancing test to weigh the
law refers to remedial sanctions and punitive          to support its conclusion that the proceeding      hardships suffered by the creditor under the
sanctions for contempt.27 A contempt proceeding        is criminal and not civil.29 A criminal contempt   automatic stay against those suffered by the
seeking remedial sanctions is civil, and one           proceeding is designed to vindicate the dignity    Debtors if the stay is lifted.”40 Once the moving
seeking punitive sanctions is criminal.28              of the court by punishing the contemnor for        party makes an initial showing of cause, the
    When pursuing a contempt proceeding                knowingly violating a court order. The primary     burden shifts to the debtor to demonstrate why
in state court against a debtor in a pending           consideration in determining whether a con-        the stay should remain in place. 41

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The Intersection of Family Law and Bankruptcy - Look Both Ways Before Crossing - FEATURE | FAMILY LAW - Colorado Bar Association
FEATURE | TITLE
          FAMILY LAW

                                                                            “
In re Curtis                                                                                              timely adjudicated in state court; (5) there is
In the Tenth Circuit, courts apply the “Curtis                                                            no independent basis for federal jurisdiction
factors” to determine whether to grant relief                                                             other than bankruptcy; and (6) the matter is
from the automatic stay to allow a creditor to
pursue claims in a pending state court pro-
                                                                    While ‘the                            “non-core.”48 Actions are non-core if they do
                                                                                                          not depend on the bankruptcy laws for their
ceeding. The Curtis factors are:                               divorce court is                           existence and could proceed in another court.49

                                                                the best forum
    1. whether relief would result in a partial or                                                             Courts consider 12 factors when deciding
       complete resolution of the issues;                                                                 whether permissive abstention applies.50 Not
    2. lack of any connection with or interference
       with the bankruptcy case;
                                                              for the division of                         all 12 factors must be present for permissive
                                                                                                          abstention to be appropriate. Ultimately,
    3. whether the other proceeding involves                  marital property,’                          permissive abstention focuses on the federal

                                                               the bankruptcy
       the debtor as a fiduciary;                                                                         court’s duty of comity to state courts and the
    4. whether a specialized tribunal with the                                                            respect the federal courts should show to the
       necessary expertise has been established
       to hear the cause of action;
                                                                  court retains                           state courts, particularly as to family law and
                                                                                                          domestic relations matters.51
    5. whether the debtor’s insurer has assumed                  jurisdiction to                               At the outset of the bankruptcy case, counsel

                                                                ‘adjudicate the
       full responsibility for defending it;                                                              should evaluate whether the state court is a
    6. whether the action primarily involves                                                              more favorable forum based on the specific
       third parties;
    7. whether litigation in another forum would
                                                             impact of the state                          nature of the family law issues, the state court’s
                                                                                                          expertise with the relevant family law issues, and
       prejudice the interests of other creditors;             court’s division                           the extent to which the state court has already

                                                                   of property
    8. whether the judgment claim arising from                                                            delved into the issues in the pending state court
       the other action is subject to equitable                                                           proceedings. A former spouse should consider
       subordination;
    9. whether the movant’s success in the other
                                                                   in a manner                            requesting the bankruptcy court to abstain from
                                                                                                          deciding state law issues, such as what property
       proceeding would result in a judicial lien
       avoidable by the debtor;
                                                                   that reflects                          is marital property. Under Colorado domestic
                                                                                                          law, title to property does not necessarily control
   10. the interests of judicial economy and the                  the priorities                          the characteristic of that property as marital or

                                                                established by
       expeditious and economical resolution                                                              separate.52 Even if an asset is titled solely in a
       of litigation;                                                                                     debtor’s name, the divorce court may determine
   11. whether the parties are ready for trial in
       the other proceeding; and
                                                               the Bankruptcy                             that the asset qualifies as marital property and
                                                                                                          the former spouse’s interest in such property
   12. the impact of the stay on the parties and                      Code.’                              would not be property of the bankruptcy estate.53
       the balance of harms.42                                                                            It is important to remember that relief from

                                                                            ”
    “Not all of these factors will be relevant in                                                         stay may be necessary before proceeding in
every case . . . [a]nd the court need not give                                                            the state court if the bankruptcy court abstains.
equal weight to each factor.”43 Relief from stay is
appropriate where the bankruptcy court could                                                              The Discharge
not grant complete relief to the parties.44 This      Abstention                                          One of the primary reasons for filing a bank-
consideration is particularly relevant in a divorce   Bankruptcy courts sometimes abstain from            ruptcy case is to obtain a discharge of debts.54
proceeding related to the division of property        a case that involves complex issues of state        The Bankruptcy Code allows individuals to
because the bankruptcy court does not have            law. Family law proceedings often fall into         discharge pre-petition debts, subject to certain
jurisdiction to resolve issues such as custody        this category. Abstention is governed by 28         exceptions,55 and imposes a “discharge injunc-
and support.45 While “the divorce court is the        USC section 1334(c) and can be mandatory or         tion” against any efforts to collect a discharged
best forum for the division of marital property,”     discretionary.                                      debt.56 Similar to a violation of the automatic
the bankruptcy court retains jurisdiction to              Mandatory abstention applies when all           stay, a violation of the discharge injunction
“adjudicate the impact of the state court’s           of the following elements are present: (1) a        exposes a person to actual damages, punitive
division of property in a manner that reflects        party files a timely motion to abstain;47 (2) the   damages, costs, and attorney fees.57 Therefore, it
the priorities established by the Bankruptcy          action is based on state law; (3) an action is      is essential to understand which debts incurred
Code.”46                                              pending in state court; (4) the action can be       in a divorce proceeding are discharged.

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In a chapter 7, 11, and 12 case, DSOs and        of the estate vests in the debtor unless the plan   activity after confirmation of a chapter 13
section 523(a)(15) debts are not discharged.58       provides otherwise.68 A plan should provide that    plan, the terms of the plan could do so for a
In contrast, in a chapter 13 case, DSOs are not      property of the estate vests in the debtor except   pre-petition DSO.74
discharged and section 523(a)(15) debts are          for those funds necessary to make the payments          For these reasons, a DSO creditor must
discharged.59 As explained above, whether a debt     required under the confirmed plan.69 There are      carefully review the chapter 13 plan to ensure
incurred in a divorce proceeding is a DSO often      a number of additional requirements that a          that it includes payment for all pre-petition DSOs
depends on disputed factual issues. Therefore,       chapter 13 plan must satisfy to be confirmed.70     and that excessive amounts are not included in
when seeking to collect a debt incurred in a              A confirmed chapter 13 plan binds the debtor   property of the estate after plan confirmation.
divorce proceeding after a debtor obtains a          and all creditors.71 The U.S. Supreme Court has         While other details of chapter 13 plan
chapter 13 discharge, it is good practice to ask     stated that a DSO is not dischargeable under        confirmation are beyond the scope of this
the state court to make a finding that the debt      any circumstances.72                                article, counsel should consider whether a
is a DSO and, therefore, was not discharged.                                                             client would benefit by successfully objecting
    To best protect the creditor spouse, the                                                             to plan confirmation based on DSO issues. A

                                                                           “
practitioner should suggest a form of order                                                              debtor’s failure to remain current on the payment
in the state court order that confirms the pay-                                                          of post-petition DSOs is ground for blocking
ments fit within the definition of a DSO. Where                                                          confirmation of the plan, as well as grounds for
appropriate, focus on the relative income and                                                            dismissal or conversion of the case.75 If a debtor
education level of the parties and who the                    Bankruptcy                                 is unable to confirm a plan, the bankruptcy case
primary caregiver for the children is, and include
this information in recital paragraphs. The                courts, including                             would be converted to chapter 7 or dismissed.76
                                                                                                         Under either of these scenarios, no debt based
parties can include an express statement that
a particular payment is in the nature of support
                                                              courts in the                              on a divorce proceeding would be discharged,
                                                                                                         whether or not it is a DSO.
and would not be dischargeable in the event of                 District of
                                                           Colorado, do not
a future bankruptcy filing.60 If the former spouse                                                       Conclusion
will retain property in exchange for a payment,                                                          The Bankruptcy Code protects the interests
the client spouse should remain on the title until
the payments are made. If the title is already in
                                                             agree on what                               of former spouses and dependent children of
                                                                                                         a debtor by prioritizing DSOs. Practitioners
the former spouse’s name, consider whether the                it means for                               must be well-versed with the avenues for relief

                                                            property of the
obligation to make the payment can be secured                                                            under the various Bankruptcy Code chapters to
by a lien against the property and perfect that                                                          maximize the recovery for the former spouse
lien as soon as practicable.
    Other grounds for objecting to discharge
                                                            estate to vest in                            and dependent children if a bankruptcy case
                                                                                                         is filed.
may exist depending on the specific facts of               the debtor after a
                                                           plan is confirmed.
a case. These could include a debt incurred
                                                                                                                                Peter Cal is a member of
based on fraud,61 embezzlement or larceny,62
                                                                                                                                Sherman & Howard’s Trial
or willful or malicious injury.63 The bankruptcy                                                                                and Litigation Group in

                                                                           ”
court has exclusive jurisdiction to determine                                                                                   Denver. He focuses his
                                                                                                                                practice on all aspects of
these claims,64 and there are strict deadlines
                                                                                                         bankruptcy and insolvency matters, including
for commencing an action based on these                                                                  workouts, restructurings, bankruptcy court lit-
types of claims.65                                                                                       igation, as well as financial and real estate liti-
                                                                                                         gation in state and federal courts. Cal regularly
                                                                                                         represents secured and unsecured creditors and
Plan Confirmation Issues                                 These principles create confusing situations.   chapter 7 trustees—pcal@shermanhoward.com.
Plan confirmation provides an opportunity for        Bankruptcy courts, including courts in the Dis-     Jordan Fox leads the family law practice group
a DSO creditor to protect her interests.             trict of Colorado, do not agree on what it means    at Sherman & Howard in Denver. He has dedi-
                                                                                                         cated his legal practice to family law for more
   A chapter 13 plan cannot be confirmed             for property of the estate to vest in the debtor
                                                                                                         than 20 years. Fox also serves as an expert
unless the debtor is current on the payment of all   after a plan is confirmed.73 The issue becomes      witness and consults with other attorneys on
post-petition DSOs.66 In addition, a pre-petition    significant because the automatic stay precludes    family law topics—jfox@shermanhoward.com.
DSO is entitled to first priority when plan pay-     collection activity of DSOs from property of the
                                                                                                         Coordinating Editors: Halleh Omidi, hto@
ments are distributed to unsecured creditors.67      estate, except for wage garnishments. Even if       mcguanehogan.com; Courtney Allen, allen@
After a chapter 13 plan is confirmed, property       the automatic stay does not preclude collection     epfamilylawattorneys.com

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FEATURE | TITLE
          FAMILY LAW

NOTES
1. The Bankruptcy Code is codified at USC Title        F.3d 1210, 1215 (9th Cir. 2002) (automatic stay       (B.A.P. 10th Cir. 2003)).
11.                                                    imposes affirmative duty on creditor in pending       40. In re Rouse, 301 B.R. 86, 89 (Bankr. D. Colo.
2. DSOs are defined at Bankruptcy Code                 action to dismiss or stay proceeding); Lawrence       2003).
section 101(14A). Any other debt incurred in a         Athletic Club v. Scroggin (In re Scroggin),
                                                                                                             41. 11 USC § 362(g); Dryja, 425 B.R. at 611.
divorce proceeding is included in the exception        364 B.R. 772, 779–80 (B.A.P. 10th Cir. 2007)
                                                       (judgment creditor must notify garnishee of           42. In re Curtis, 40 B.R. 795, 799–800 (Bankr. D.
to discharge provided by section 523(a)(15) of
                                                       release of garnishment to effectuate termination      Utah 1984).
the Bankruptcy Code.
                                                       of garnishment).                                      43. Dryja, 425 B.R. at 611 (quotation omitted).
3. See, e.g., Sampson v. Sampson (In re Samp-
                                                       24. Sampson, 997 F.2d at 722–23.                      See also Dampier v. Credit Invs., Inc. (In re
son), 997 F.2d 717, 721 (10th Cir. 1993) (whether
                                                                                                             Dampier), 2015 Bankr. LEXIS 3800 at *9 (B.A.P.
a debt is a nondischargeable DSO is a question         25. Id. at 721 (“Whether an obligation to a former
                                                                                                             10th Cir. Nov. 5, 2015).
of federal law).                                       spouse is actually in the nature of support is a
                                                       factual question . . . .”).                           44. See Baack v. Horizon Womens Care Prof’l
4. Id. at 726 (finding an obligation is in sub-
                                                                                                             LLC (In re Horizon Womens Care Prof’l LLC),
stance support where it “effectively functions         26. Gazzo, 505 B.R. at 42 (trial court must
                                                                                                             506 B.R. 553, 559 (Bankr. D. Colo. 2014)
as the former spouse’s source of income”).             make a specific finding that there is non-estate
                                                                                                             (refusing relief from stay provides no benefit to
5. Jones v. Jones (In re Jones), 9 F.3d 878, 882       property from which the debtor can pay the
                                                                                                             any party where the bankruptcy court cannot
(10th Cir. 1993) (support as used in section           DSO) (citing In re Marriage of Weis, 232 P.3d 789
                                                                                                             deal with the unresolved issues); Midwest Motor
523(a)(5) of the Bankruptcy Code is entitled to        (Colo. 2010)).
                                                                                                             Supply Co. v. Hruby (In re Hruby), 512 B.R. 262,
a broad application).                                  27. See CRCP 107.                                     270 (Bankr. D. Colo. 2014) (where the bankrupt-
6. In re Wodark, 425 B.R. 834, 837 (B.A.P. 10th        28. In re Marriage of Cyr, 186 P.3d 88, 91–92         cy court does not have jurisdiction to resolve
Cir. 2010) (obligation to pay joint credit card        (Colo.App. 2008) (discussing elements of              the disputes “denying relief cannot serve any
debt is a DSO even where there is no express           punitive and remedial contempt).                      interest of judicial economy”).
hold harmless or indemnification agreement             29. In re Marriage of Nussbeck, 974 P.2d 493, 501     45. Dryja, 425 B.R. at 611–12 (discussing state
with the former spouse).                               (Colo. 1999) (identifying the findings the trial      court expertise on issues related to division
7. See Robinson v. Robinson (In re Robinson),          court should make when deciding a contempt            of property); MacDonald v. MacDonald (In re
921 F.2d 252, 253 (10th Cir. 1990); Busch v.           proceeding is criminal, including that the            MacDonald), 755 F.2d 715, 717 (9th Cir. 1985)
Hancock (In re Busch), 369 B.R. 614, 622–23            contemnor had the ability to pay).                    (“It is appropriate for bankruptcy courts to
(B.A.P. 10th Cir. 2007).                               30. Weis, 232 P.3d at 796 (discussing a con-          avoid incursions into family law matters out
8. Jones, 9 F.3d at 882 (attorney fees incurred        tempt proceeding in the context of the failure to     of consideration of economy, judicial restraint,
in a child custody proceeding are a nondis-            pay a DSO).                                           and deference to our state court brethren and
chargeable DSO); In re Notary, 547 B.R. 411,                                                                 their established expertise in such matters.”)
                                                       31. Id. at 797 (“A civil, or remedial, contempt
421–22 (Bankr. D. Colo. 2016) (attorney fees                                                                 (citation omitted).
                                                       proceeding—such as one involving a sanction
incurred in the course of a divorce proceeding         that can be purged—is subject to the stay.”).         46. Dryja, 425 B.R. at 613.
are nondischargeable even if they are to be                                                                  47. Motions to remand are governed by 28 USC
                                                       32. Id. (contempt proceeding is not criminal
paid by the debtor spouse directly to the other                                                              § 1452 and Fed.R.Bankr.P. 9027.
                                                       where the trial court finds the debtor does not
spouse’s attorneys).
                                                       have the ability to pay the debt). See also Cyr,      48. Notary, 547 B.R. at 417 (concluding that
9. 11 USC § 541(a)(1); In re Dagen, 386 B.R. 777,      186 P.3d at 92.                                       mandatory abstention applies where debtor
781 (Bankr. D. Colo. 2008).                                                                                  removed state court action to bankruptcy
                                                       33. See, e.g., Gagliardi, 290 B.R. at 818 (“A
10. 11 USC § 541(a)(6) (excluding from property        creditor and its agents act at their own peril        court where attorneys for former spouse were
of the estate post-petition earnings of an             when they usurp the bankruptcy court’s role           seeking to collect nondischargeable fee award).
individual debtor).                                    in determining the scope of the automatic             49. Id. at 419 (citing In re Gardner, 913 F.2d 151,
11. 11 USC §§ 1115(a) and 1306(a).                     stay, without binding authority that is clearly       1518 (10th Cir. 1990)).
12. 11 USC § 707(b).                                   applicable to the facts at hand. Filing a stay        50. Id. at 419–20 (identifying the factors
                                                       relief motion is an inexpensive form of insurance     relevant to permissive abstention).
13. 11 USC § 109(e).
                                                       against a stay violation award.”).
14. 11 USC § 362(a).                                                                                         51. Id. at 419 (“comity is the respect owed by
                                                       34. See Barner v. Saxon Mtg. Servcs., Inc. (In        one political subdivision to honor the legisla-
15. Dagen, 386 B.R. at 781 (the automatic stay         re Barner), 597 F.3d 651, 654 (5th Cir. 2010)         tive, executive or judicial acts of other political
“throws a broad blanket of protection over a           (concluding that a declaration that the automat-      subdivisions”).
debtor and property of the estate”); Gazzo             ic stay does not apply does not “fall within the
v. Ruff (In re Gazzo), 505 B.R. 28, 35 (Bankr.                                                               52. CRS § 14-10-113 (marital property includes
                                                       bounds of Rule 7001” and can be obtained by
D. Colo. 2014) (the automatic stay should be                                                                 all property acquired during the marriage
                                                       motion rather than adversary proceeding).
construed broadly in favor of the debtor and                                                                 unless it falls within limited exceptions found in
                                                       35. See Fed.R.Bankr.P. 4001(a).                       CRS § 14-10-113(2)).
the exception should be applied narrowly).
                                                       36. 11 USC § 362(e) (setting forth deadlines in       53. See Dryja, 425 B.R. at 612 (the nature
16. Job v. Calder (In re Calder), 907 F.2d 953,
                                                       which the court must decide the motion). These        and extent of a debtor’s legal and equitable
956 (10th Cir. 1990).
                                                       deadlines can be extended by the court or             interests are determined by state law); Reinbold
17. In re Gagliardi, 290 B.R. 808, 819–20 (Bankr.      waived by the moving party.                           v. Thorpe (In re Thorpe), 546 B.R. 172, 177
D. Colo. 2003).
                                                       37. See generally Fed.R.Bankr.P. 4001(a)(2).          (Bankr. C.D. Ill. 2016) (“The divorce court is the
18. 11 USC § 362(k).                                                                                         appropriate forum to equitably allocate martial
                                                       38. See Santangelo Law Offices, P.C. v. Touch-
19. 11 USC § 362(b)(2)(A).                             stone Home Health LLC (In re Touchstone               property.”).
20. 11 USC § 362(b)(2)(B).                             Home Health LLC), 572 B.R. 255, 283 (Bankr.           54. See McVay v. DiGesualdo (In re DiGesualdo),
21. 11 USC § 362(b)(2)(C); Jordahl v. Dyal (In re      D. Colo. 2017) (“Relief from stay proceedings         463 B.R. 503, 524 (Bankr. D. Colo. 2011) (a
Jordahl), 555 B.R. 861, 866–67 (Bankr. S.D. Ga.        are summary in nature and determined on an            “central purpose of the Bankruptcy Code” is
2016) (section 362(b)(2)(C) limits the exception       expedited basis. ‘It is not a full determination      to provide a “fresh start” to the “honest but
to withholding income through wage garnish-            on the merits.’”) (quoting U.S. Bank, N.A. v.         unfortunate debtor”) (quoting Standiferd v. U.S.
ments or income deduction orders).                     Brumfiel (In re Brumfiel), 514 B.R. 637, 645          Trustee, 641 F.3d 1209, 1212 (10th Cir. 2011)).
                                                       (Bankr. D. Colo. 2014)).                              55. See 11 USC §§ 727, 1141, 1228, and 1328.
22. 11 USC § 362(b)(1).
                                                       39. In re Dryja, 425 B.R. 608, 611 (Bankr. D. Colo.   56. See 11 USC § 524(a).
23. See, e.g., Eskanos & Adler, P.C. v. Leetien, 309
                                                       2010) (quoting In re Busch, 294 B.R. 137, 140

38   |   C OL OR A D O L AW Y E R   |   F E BRUA RY 2 01 9
FEATURE | TITLE
          FAMILY LAW

57. See, e.g., Peyrano v. Sotelo (In re Peyrano),     the estate in the debtor or any other entity on      a chapter 13 case to a chapter 7 case or dismiss
B.A.P. No. EO-160032, 2017 WL 2731299 at *6           confirmation of the plan or at another time).        the chapter 13 case, whichever is in the best
(B.A.P. 10th Cir. June 26, 2017).                     69. See In re Segura, No. 08-14280 MER, 2009         interests of creditors and the estate, if the debt-
58. 11 USC §§ 523(a)(5) (DSO) and 523(a)              WL 416847 at **3–4 (Bankr. D. Colo. Jan. 9,          or is unable to confirm a plan); In re Khan, No.
(15) (any debt to a spouse, former spouse, or         2009) (court will not confirm a plan in which        14-13514 MER, 2015 WL 739854 at *6 (Bankr.
child other than a DSO incurred in a divorce          the estate holds greater assets than is neces-       D. Colo. Feb. 19, 2015) (denying confirmation
proceeding).                                          sary to make plan payments).                         of amended chapter 13 plan and dismissing
                                                                                                           chapter 13 case where there is no evidence the
59. 11 USC §§ 523(a) (5) and 1328(a)(2).              70. See generally 11 USC § 1325 (identifying
                                                                                                           debtor would be able to confirm a plan in the
60. See Weis, 232 P.3d at 795.                        circumstance under which court must confirm a
                                                                                                           future).
                                                      chapter 13 plan).
61. 11 USC § 523(a)(2).
                                                      71. 11 USC § 1327(a).
62. 11 USC § 523(a)(4).
                                                      72. United Student Aid Funds, Inc. v. Espinosa,
63. 11 USC § 523(a)(6).
                                                      559 U.S. 260, 273 n.10 (2010) (declining to state
64. 11 USC § 523(c)(1); Resolution Trust Corp.        under what circumstances a judgment dis-
v. McKendry (In re McKendry), 40 F.3d 331,            charging a DSO could be set aside as void). As
335–36 (10th Cir. 1994).                              discussed herein, a confirmed chapter 13 plan
65. Fed.R.Bankr.P. 4007(c) and (d); Themy v.          can be res judicata in establishing the amount
Yu (In re Themy), 6 F.3d 688, 689 (10th Cir.          of DSOs that must be paid under a plan.
1993) (noting that the Tenth Circuit has strictly     73. See Segura, 2017 WL 416847 at *6 (dis-
construed the deadlines).                             cussing different interpretations of vesting of
66. See 11 USC § 1325(a)(8).                          property in the debtor after plan confirmation).
67. See 11 USC § 507(a)(1).                           74. See Dagen, 386 B.R. at 783 (confirmed plan
68. 11 USC § 1327(b); Dagen, 386 B.R. at 782.         precluded collection of DSO).
See also 11 USC § 1322(a)(9) (chapter 13 plan         75. 11 USC § 1307(c)(11).
must provide for the vesting of property of           76. See 11 USC § 1307(c)(5) (court may convert

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