In a Chapter 13 bankruptcy, debts given “priority” status by the bankruptcy code must be paid in full during the plan (usually 3-5 years). Priority debts include “domestic support obligations,” such as delinquent child support and alimony. What qualifies as child support and alimony is usually obvious, but what about attorney fees often ordered to be paid in a divorce decree? Are attorney fees also considered domestic support obligations? A recent decision from the 8th Circuit Court of Appeals Bankruptcy Appellate Panel (BAP) ruled attorney fees ordered to be paid by a Chapter 13 debtor to his ex-spouse were priority debts that needed to be paid in full during the Chapter 13 plan.
In this Chapter 13 bankruptcy case, the debtor had been ordered by a state court to pay monthly child support to his ex-spouse. Litigation in state court over the amount of the child support continued for five years and the state court ordered the debtor to pay the attorney fees incurred by his ex-spouse. After filing Chapter 13 bankruptcy, the debtor tried to discharge the attorney fee debt by arguing it wasn’t a priority debt that needed to be paid in full. The ex-spouse objected to the proposed Chapter 13 plan, claiming the attorney fees were domestic support obligations required to be paid as a priority.
The 8th Circuit BAP ruled that when deciding whether a debt was a domestic support obligation the question is what purpose the debt was intended to serve. Was the state court order to pay attorney fees for his ex-spouse intended to be a form of support for her? Sometimes the award of attorney fees are not intended as support, but under the facts of this case the Court said the disputed attorney fees was support. The Court went on to say that “a majority of courts agree that attorney fee awards related to enforce or defend issues involving child support, visitation or custody that effect the welfare of the children do qualify as domestic support obligations” that need to be paid in full during the Chapter 13 plan.