Court Opinion

ID: 9687351
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:25:46.588515+00
Date Added: 2024-06-11T18:18:26.337090
License: Public Domain

OPINION
VOLINN, Bankruptcy Judge:
OVERVIEW
Appellant, a Chapter 131 debtor, challenges an order that granted his former wife relief from the § 362 stay to collect child support arrearages after confirmation of his plan which by its terms provided for payment on her claim. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
On November 30,1988, Francisco Pacana filed a petition and plan under Chapter 13. His schedules show a total unsecured indebtedness of $34,500.00 which includes a $13,900 debt to his ex-wife, Marcalane S. Pacana-Siler, for child support arrearages. The remaining debts result from use of credit cards and consumer loans. The Chapter 13 plan is allegedly based on classification of Ms. Siler’s debt as “priority,” and provided for payment to her, but without any provision concerning the timing and amount of disbursements to be paid on the debt. The debtor’s plan provides for a 14 percent payment to unsecured creditors. In the “Plan Computation” filed with the plan the following is stated: *21We note that the plan does not provide for payment of a priority claim, which appears at odds with the alleged classification of Ms. Siler’s debt as priority. Her debt is included in the unsecured creditors’ 14 percent calculation as indicated above.
*20PLAN COMPUTATION
PRIORITY NONE NONE
SECURED 9,720.00
INTEREST ON SECURED 2,000.00
14 % OF UNSECURED 5,000.00
ATTORNEY FEE 700.00
Subtotal = 17,420.00
TRUSTEE FEE = 1,750.00
Total = 19,170.00
*21On February 13, 1989, the plan was confirmed without appearance or objection by Ms. Siler. However, on the date of confirmation, there was outstanding an unresolved application, filed by Ms. Siler on or about January 20, seeking relief from stay to enforce the child support debt. After a hearing on March 3, 1989, the court granted relief from stay “to the extent that in addition to what is paid to moving party on her priority claim in the Chapter 13 she may collect an additional $250 per month from the debtor to be applied against the arrearages. This additional $250 may be collected upon immediately by agreement with or by levy upon the debtor’s wages or other moneys due him.” The court entered its written order on March 16, 1989. Mr. Pacana timely filed a notice of appeal. Ms. Siler did not cross-appeal and has taken the position in her appellee’s brief and in argument to the Panel that the order of the trial court should be affirmed.
Mr. Pacana contends that the court’s order renders his plan infeasible because he will have insufficient net income to pay living expenses after making plan payments. He contends that his plan by implication provides for 100 percent payment to Ms. Siler simply by designating her as a priority claimant, although, as stated, the plan contains no provision whatsoever for such payment. As indicated above she appears to have been treated as a member of the 14 percent unsecured creditor class.
ISSUE PRESENTED AND STANDARD OF REVIEW
Mr. Pacana appeals from an order granting Ms. Siler partial relief from stay to enforce her claim for child support payments on a limited monthly basis. We question, however, whether the automatic stay or the plan can affect at all her efforts to enforce that claim. These are legal issues subject to de novo review. See, e.g., Ragsdale v. Haller, 780 F.2d 794 (9th Cir.1986).
DISCUSSION
A. Statutory Framework
The debtor’s brief states that both the Code and the plan treat his child support obligation2 as a priority debt under § 507, which will be paid in full. We see nothing in § 507 that would apply to child support obligations. As discussed above, the payment provisions of the plan itself do not provide for any priority payments, either to appellee or otherwise.3 In any event, whether child support obligations are treated as priority claims or ordinary unsecured claims does not affect our analysis.
Section 1322 provides in pertinent part:
(a) The plan shall—
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(2) provide for the full payment, in deferred cash payments, of all claims entitled to priority under section 507 of this title....
(b) ... the plan may—
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(2) modify the rights ... of holders of unsecured claims ...;
(3) provide for the curing or waiving of any default....
Thus § 1322, standing alone, arguably permits a plan to provide for the deferred payment of a debtor’s child support obligation.
*22Section 1327(a) provides for the consequences to creditors on confirmation stating that:
(a) The provisions of a confirmed plan bind the debtor and each creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan.
This section, if applicable, also appears broad enough to bind the appellant to the provisions of the plan. Finally, § 1327(c) provides that after confirmation, the debt- or’s property is free from claims provided for by the plan. The pertinent provisions of § 1327 provide:
(b) Except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor.
(c) Except as otherwise provided in the plan or in the order confirming the plan, the property vesting in the debtor under subsection (b) of this section is free and clear of any claim or interest of any creditor provided for by the plan.
However, § 362(b)(2) specifically excepts from the automatic stay “the collection of alimony, maintenance, or support from property that is not property of the estate_” See In re Stringer, 847 F.2d 549 (9th Cir.1988). Since under § 1327(b), “the confirmation of a plan vests all of the property of the estate in the debtor,”4 the effect of § 362(b)(2) is to except from the automatic stay any efforts to collect child support obligations owed by the debtor. In any event, while most ordinary debts are subject to discharge under § 1328, child support obligations are specifically excepted from discharge under §§ 1328(a)(2) and 523(a)(5),5 and therefore from the post-discharge injunction of § 524(a)(2).
Thus, Congress by virtue of § 362(b)(2) specifically excepted child support obligations from the effect of the bankruptcy stay while the case is pending, and through §§ 1328(a)(2) and 523(a)(5), it specifically excepted child support obligations from the effect of confirmation in the Chapter 13 bankruptcy case. These provisions, read together, are consistent and manifest a legislative intent that child support obligations be excepted from the broad reach of §§ 1322 and 1327, and therefore from the effects of a Chapter 13 plan, as well as the post-confirmation automatic stay.
B. Case Analysis
Case law on this issue ranges from excluding support debts from treatment under a Chapter 13 plan through various forms of inclusion resulting in distribution under the plan of support payments. The Fourth Circuit has adopted the strict exclusionary view, holding that past due child *23support obligations cannot be included in a Chapter 13 plan. See Caswell v. Lang (In re Caswell), 757 F.2d 608, 610-11 (4th Cir.1985). The court reasoned that a federal tribunal should not interfere with a state court decision as to how and when a child support debt is to be paid as these are areas of particular state concern. Id. at 610. The court stated that:
The Supreme Court has long favored state court retention of exclusive control over the collection of child support. See In re Burrus, 136 U.S. 586, 593-594, 10 S.Ct. 850, 852-853, 34 L.Ed. 1500 [sic] (1890) (“The whole subject of the domestic relations of husband and wife, parent and child, belong to the laws of the States and not to the laws of the United States.”).
757 F.2d at 610 (additional citations omitted).6 The court further stated that:
[I]t would result in great injustice to require children to await a bankruptcy court’s confirmation of a debtor’s chapter 13 plan before permitting them to enforce their state court-determined right to collect past due support payments. The bankruptcy code may not be used to deprive dependents, even if only temporarily, of the necessities of life.
Id. It therefore upheld the rejection by the bankruptcy and district courts of a Chapter 13 plan that provided for 100% payment to an unsecured class consisting solely of the debt for past due child support and for 25% payment to the other class of unsecured creditors. Id. See also In re Garrison, 5 B.R. 256, 260-261 (Bankr.E.D.Mich. en banc, 1980) holding that the section 362 stay did not enjoin enforcement of support obligations. See also Griffin v. Griffin (In re Griffin), 39 B.R. 112, 114 (Bankr.W.D.Wash.1984), where the court in ruling on the dischargeability of attorney fees awarded in a dissolution proceeding, stated: “it would be inappropriate for a bankruptcy court to venture into an area so traditionally the province of state courts. Embarking upon such a course would result in two different court systems treating problems of broken families on a continuing basis, with resulting confusion, forum shopping, and, inevitably, exacerbation of a notoriously problem-ridden area of litigation.”
McCray v. McCray (In re McCray), 62 B.R. 11, 12 (Bankr.D.Colo.1986), followed Caswell in holding that a debt for past due child support may not be included in a Chapter 13 plan. Consequently, in McCray, the court granted debtor’s former spouse relief from the automatic stay to permit her to continue collection proceedings on her judgment against the debtor for past due child support.
Caswell has been criticized as too narrowly construing the power of bankruptcy courts to deal with claims against the debt- or. See 5 Collier on Bankruptcy 111322.14[1] (15th ed. 1989) (noting that the creditor spouse may welcome payment through the plan and urging that it “may be completely appropriate in some cases where the debtor is not using the bankruptcy case as a device for evading familial responsibilities”); 3 Norton Bankr.L. & Prac. § 76.02 (W.L. Norton, Jr. 1987).
Other courts have approved a separate classification for child support debts that pays 100%, even though other classes of unsecured claims receive less than 100%. E.g., In re Storberg, 94 B.R. 144, 147-48 (Bankr.D.Minn.1988); In re Haag, 3 B.R. 649, 651 (Bankr.D.Or.1980); In re Curtis, 2 B.R. 43, 44 (Bankr.W.D.Mo.1979). However, other courts have held that the debtor may not accord separate classification and dissimilar treatment to child support debts. In re Stewart, 52 B.R. 281, 282-83 (Bankr.W.D.N.Y.1985). The court reasoned that the sole express exception to the ban on special treatment of certain creditors within a class was in § 1322(a)(3) concerning consumer debts on which a co-debtor exists.
*24Another court denied confirmation of Chapter 13 plans that included child support debts because the obligees’ written consents were not obtained. In re Davidson, 72 B.R. 384, 390-91 (Bankr.D.Colo.1987). The court held that it lacked power to alter a support-related debt as imposed by a state court. Id. at 386. Further, it held that if the debtor attempted to handle the debt outside of the plan, an unpaid support creditor would be entitled, after confirmation, to garnish the debtor’s wages remaining after his payment of plan-related obligations. Id. at 390. Thus, a plan that includes child support debts would be unworkable absent written consent by such creditor. Id. at 390; The court in Davidson acknowledged that a debtor who cannot obtain consent from the ex-spouse would be forced to resort to Chapter 7. 72 B.R. at 391. See also Hamilton v. Lomas Mortgage U.S.A. (In re Hamilton), 100 B.R. 385, 388-89 (N.D.Ill.1989) (holding that despite § 1327, a creditor is not bound by the plan when he had sought relief from stay before confirmation, citing § 1329 which allows post-confirmation modification of the plan).
The case of In re Warner, 115 B.R. 233, (Bankr.C.D.Cal.1989) considered a plan proposing to deal with a child support obligation and, on objection to confirmation, dismissed the case. The court concluded that there was no basis in the Bankruptcy Code for discrimination between support arrearage and the debtor’s other unsecured obligations. In the course of a broadly ranging discussion, the court stated:
Confirming Debtor’s proposed plan would entirely divest the state court of any jurisdiction to enforce payments of child support arrearages unless and until the chapter 13 case were to be dismissed.
Filing a bankruptcy case to defraud a former spouse or to evade the duty to support dependent children has long been recognized as an abuse of the bankruptcy process. (Citations omitted.)
Id. at 242.
The court after reviewing various authorities, including some of those discussed above, stated:
Minimal payout to unsecured creditors cannot be justified if it can only be achieved by having bankruptcy courts divest the state courts of their jurisdiction over child support enforcement. Pulling these issues into bankruptcy court means the substitution of the judgment of the bankruptcy court for that of the family law court on the key question of how much of the debtor’s take-home pay should be used to support the former family. Because of the policies favoring state resolution of support issues, bankruptcy court intervention into this area can be justified only if the benefits to be achieved under the chapter 13 plan are significant enough substantially to outweigh the detrimental impact of the intervention.
Id. at 244.
We recognize that various cases cited above are reacting constructively to the economic problem of a debtor who, unable to meet support or alimony obligations, turns to Chapter 13. However, the Code’s treatment of child support obligations manifests Congressional intent that while a Chapter 13 plan may alter or delay the enforcement of ordinary unsecured creditors’ claims, child support claimants need not wait in line with such creditors, but rather may proceed against the debtor without the hindrance of either automatic stay or discharge.
Our analysis has attempted to coordinate or reconcile the provisions of § 362(b)(2) (excluding from the stay collection of alimony or support from non-estate property); § 524(a)(2) (permanent injunction against collection of debts discharged); § 1306(a)(2) (including the debtor’s post-petition wages in the estate); § 1327(b) (providing that on confirmation all property of the estate vests in the debtor); § 1327(a) (making confirmation binding on each creditor); and § 1328(a)(2) (precluding a Chapter 13 discharge for debts related to alimony or support) all in the light of section 523(a)(5) *25(preserving spousal and family support debts from discharge).
The Supreme Court in an analogous statutory context stated:
Insofar as marriage is within temporal control, the States lay on the guiding hand. “The whole subject of the domestic relations of husband and wife, parent and child, belongs to the laws of the States and not to the laws of the United States.” In re Burns, 136 US 586, 593-594, 34 L Ed 500, 10 S Ct 850 [852-53] (1890). Federal courts repeatedly have declined to assert jurisdiction over divorces that presented no federal question. See e.g., Ohio ex rel. Popovici v Agler, 280 US 379, 74 L Ed 489, 50 S Ct 154 (1930). On the rare occasion when state family law has come into conflict with a federal statute, this Court has limited review under the Supremacy Clause to a determination whether Congress has “positively required by direct enactment” that state law be pre-empted. Wetmore v. Markoe, 196 US 68, 77, 49 L Ed 390, 25 S Ct 172 [175] (1904). A mere conflict in words is not sufficient. State family and family-property law must do “major damage” to “clear and substantial” federal interests before the Supremacy Clause will demand that state law be overridden. United States v. Yazell, 382 U.S. 341, 352, 15 L.Ed 2d 404, 86 S.Ct. 500 [506] (1966).
Hisquierdo v. Hisquierdo, 439 U.S. 572, 581, 99 S.Ct. 802, 811, 59 L.Ed.2d 1, 10 (1979). In the case before us, specific provisions of the Bankruptcy Code relative to spousal support require rather than preclude application of state law.
CONCLUSION
It is our view that the foregoing sections of the Code demonstrate the intention of Congress that collection of debts for child support or alimony should not be inhibited any more under Chapter 13 than under Chapter 7. While economic problems all too often attend a foundered marriage, complete resolution thereof is not within the purview of a federal bankruptcy court. Obligations relating to support and alimony, intractable though they may be, are insulated from mandatory inclusion in a Chapter 13 plan by virtue of express provisions of the Bankruptcy Code.
The order of the court below terminating the stay is AFFIRMED.

. Section and chapter references refer to the Bankruptcy Code, 11 U.S.C. §§ 101-1330, unless otherwise specified.

. The debtor’s child support obligation referred to herein is the outstanding arrearage of $13,-900, which appears to be the debt at issue in this appeal.

. Since there is no basis to classify appellee’s claim separately from other unsecured claims, § 1322(a)(3) would prohibit the plan from providing for priority payments to appellee.

. We note that § 1306(a)(2) provides that:
(a) Property of the estate includes ...
(2) earnings from services performed by the debtor after the commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 11, or 12 of this title, whichever occurs first.
This could be read either as an exception to § 1327(b), in which case wages would remain property of the estate, see, e.g., In re Brilz, 96 B.R. 308 (Bankr.D.Mont.1989); Riddle v. Aneiro (In re Aneiro), 72 B.R. 424 (Bankr.S.D.Cal.1987), or as consistent with § 1327(b), in which case wages would be among the items of property of the estate which, upon plan confirmation, revert to the debtor and cease to be property of the estate, see, e.g., Mason v. Williams (In re Mason), 51 B.R. 548 (D.Or.1985). We do not decide that issue. It is not necessary to the disposition of this appeal, since the essential issue before us is whether Chapter 13 can provide a safe harbor from the pursuit of the support debts which cannot be discharged under sections 523(a)(5) and 1328(a)(2).

. Section 1328(a)(2) excepts from discharge "any debt ... of the kind specified in section 523(a)(5) of this title.” Section 523 provides in pertinent part that
(a) A discharge under section ... 1328(b) of this title does not discharge an individual debtor from any debt—
(5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement....

. See also In re Mac Donald, 755 F.2d 715, 717 (9th Cir.1985), which ruled in a Chapter 7 case that relief from stay applications should be liberally granted in family support litigation so that bankruptcy courts may “avoid incursions into family law matters.”