Opinion ID: 2982362
Heading Depth: 2
Heading Rank: 2

Heading: Judgment Lien Debt

Text: The bankruptcy court also held that the $5,000 debt that arose from Creditor paying off a judgment lien against the home was a domestic support obligation. Although the 2007 Consent Decree did not specifically address the Judgment Lien, it did assign any proceeds from the sale of the Property to the Creditor and, as discussed above, these proceeds are in the nature of support. The Debtor's sole responsibility for the Judgment Lien is resolved conclusively by the 2009 Order. The Judgment Lien Debt is necessarily a DSO because it prevented the Creditor and her children from receiving sales proceeds that were intended as support. The Judgment Lien Debt is thus “in the nature of alimony, maintenance, or support,” and is properly characterized as a DSO. In re Thomas, No. 13-10043, 2013 WL 5493214 at  (Bankr. E.D. Ky. Oct. 2, 2013). 13 Debtor argues that since the judgment lien was not addressed by the divorce decree it cannot be considered to be alimony, maintenance or support. Debtor argues that it was obtained in July 2004 while the second marriage was still intact, and that Creditor was fully aware of the circumstances leading to the judgment lien. Creditor argues that the proceeds from the sale of the home were intended to provide support for the children. Since the judgment lien reduced the amount that she received from the ultimate sale of the home, it reduced the amount of support she received. Therefore, she argues the debt should be treated as a support obligation. Case law explains that debts can qualify as support and be determined nondischargeable pursuant to § 523 even if they are owed to parties other than the payees in the statute, if the former spouse could be held responsible for the debt in question. See Holliday v. Kline (In re Kline), 65 F.3d 749 (8th Cir.1995). See also Rugiero v. DiNardo, 502 F. App’x 436, 439 (6th Cir. 2012) (holding that attorney fees could be properly treated as a domestic support obligation under the circumstances of that case, including the fact that they were incurred in a proceeding that concerned the welfare of the children); Kassicieh v. Battisti (In re Kassicieh), 482 B.R. 190 (B.A.P. 6th Cir. 2012), aff'g 467 B.R. 445 (Bankr. S.D. Ohio 2012) (guardian ad litem fees constituted a “domestic support obligation”). The judgment lien debt is not a true third-party debt because it has already been paid to the third party and Debtor has been ordered to reimburse Creditor directly for the payment. However, the reasoning for non-dischargeability of third-party debts that qualify as support applies. The state court intended Creditor to keep the family home as a residence and shelter for the children or to have the proceeds of the sale of the home as support. The 2003 consent decree required Debtor to help provide that support for the children by making larger child support payments, while the 2007 consent decree actually required the Debtor to pay half of the second mortgage. The judicial lien filed against the family home reduced the amount of support that the children received when the family home was sold. Accordingly, the state court’s order which required Debtor to pay Creditor 14 for that reduction in support is a domestic support obligation and is non-dischargeable in his chapter 13 case. The parties and the bankruptcy court focus on the 2003 and 2007 consent decrees to determine the nature of the debt that Debtor owes to Creditor. However, both the debts also arise from the 2009 order. That order references Creditor’s motions for contempt for Debtor’s failure to pay child support and for modification of child support. The 2009 order notes that Creditor withdrew both of those motions due to the arrears being paid and due to Debtor being laid off of work. However, the 2009 order goes on to order Debtor to reimburse Creditor for the second mortgage debt and the judgment lien debt, as well as to reimburse half the expenses of certain medical bills. The fact that these two debts were addressed during a hearing to deal with support issues, further indicates that the state court and the parties intended that these debts be considered in the nature of alimony, maintenance or support. Moreover, at the time of the 2009 order, the family home had already been sold. If the intention had been for the proceeds of the sale to be a property settlement, the state court could have made that clarification. Because the payment of the second mortgage is tied to support issues in all three judgments, and the judgment lien debt reduced the amount of support received and is provided for as part of a support order, the bankruptcy court’s finding that the state court intended both these debts be treated as support obligations is not clearly erroneous.