Burnett v. Burnett, No. 09-2871 (8th Cir. 2011)
Annotate this CaseDebtor reopened his Chapter 13 bankruptcy proceedings and thereafter, moved the bankruptcy court to hold in contempt his former spouse and her subrogee, West Virginia's Department of Health and Human Resources, Bureau of Child Support Enforcement (BCSE), for violating the terms of debtor's confirmed Chapter 13 repayment plan by seeking income-withholding orders against him for child and spousal support arrears. The bankruptcy court refused to hold the former spouse or BCSE in contempt but did reduce the income withholding. On appeal, the Bankruptcy Appellate Panel (BAP) reversed and reinstated the income withholdings. Debtor timely appealed. The court held that 11 U.S.C. 1327(a) did not apply to this case because the bankruptcy court confirmed debtor's plan and the plan explicitly limited the former spouse's privilege to return to family court for the sole purpose of litigating child support interest. Although the Bankruptcy Code provided that, to be confirmed, a plan must provide for the full payment of accrued interest on child support and spousal support, 11 U.S.C. 101(14A), a confirmed plan was given res judicata effect even when it violated the Code. As for debtor's claim for post-petition child and spousal support, and interests thereon, the BAP correctly ruled that these claims were beyond the purview of the plan and the bankruptcy court's jurisdiction. Therefore, the BCSE income-withholding order could exceed the monthly payment schedule provided in debtor's plan. The court further held that the former spouse's recovery of post-petition spousal and child support was permitted because they were post-petition domestic support obligations for which the Bankruptcy Code allowed no proof of claim. Accordingly, the court affirmed in part and reversed in part, remanding for further proceedings.
Court Description: Civil case - bankruptcy. Section 1327(a) of the code affords the confirmed plan res judicata effect and bars debtor's ex-spouse's attempt in a collateral state-court proceeding to expand her entitlement to relief to include interest on her pre-petition spousal support; to the extent the BAP awarded ex-spouse interest on her pre-petition spousal support, the order is reversed, and the matter is remanded to the bankruptcy court with instructions that it order the family court to deduct from its judgment any portion thereof that is attributable to the accrued interest on pre-petition spousal support.
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