1. 11 CSDA Bankruptcy Workshop Presenters: Jennifer Coultas, Los Angeles County Child Support Services Department, Jennifer_Coultas@cssd.lacounty.gov Jennifer_Coultas@cssd.lacounty.gov Tex Ritter, Sierra Nevada Regional Department of Child Support Services, Tex.Ritter@co.nevada.ca.us Tex.Ritter@co.nevada.ca.us Daniel Bell, San Bernardino County Department of Child Support Services, dbell@css.sbcounty.gov dbell@css.sbcounty.gov

2. 22 Demystifying Bankruptcy Definitions Language of bankruptcy Types of bankruptcy Resources History Child Support is First Priority Debt type

3. 33 Bankruptcy is fun and easy Discharge/Dismissal Trustee’s duties and obligations Domestic Support Obligation Automatic Stay in Bankruptcy Proof of Claim Types of Claims

4. 44 Bankruptcy is fun and easy Objections to Claims Objections to Plans –Failure to provide for current support –Failure to provide for child support arrears

5. 55 Bankruptcy is fun and easy Situations Employer files bankruptcy Obligor files bankruptcy Custodial parent files bankruptcy Notification of Bankruptcy

6. 66 Bankruptcy is fun and easy Discharge in bankruptcy Domestic Support obligations are not discharged Notice to Withhold is authorized National Medical Support Notice is authorized Tax intercept, license suspension, credit reporting and passport denial are authorized

7. 77 Bankruptcy is fun and easy File a proof of claim? Or Not? Depends on the circumstances Let’s make a deal Include unliquidated amounts (unreimbursed medical, child care, school expenses, recreational expenses if authorized by judgment or statute)

8. 88 Bankruptcy is fun and easy Objection to Claim Objection to Plan Relief from stay Motion to avoid a lien Adversary Proceedings

9. 99 Bankruptcy 201 Advanced Bankruptcy Complex Proofs of Claim Various Child Support Categories Multiple Cases Adding Interest to arrears

10. 10 Proof of Claim A claim is a right to payment. 11 U.S.C. § 101 (5). (5) 'claim' means - (A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or

11. 11 Proof of Claim A claim in bankruptcy could be the right to collect unliquidated, but accrued, unreimbursed medical expenses or educational expenses or reimbursement of child care costs not yet reduced to a judgment.

12. 12 11 U.S.C. § 101 (12A) 'debt for child support' means a debt of a kind specified in section 523(a)(5) of this title for maintenance or support of a child of the debtor.

13. 13 11 USC Section 101(14A) “Domestic Support Obligation” is a debt owed to a spouse, child, parent of a child or a governmental agency in the nature of maintenance, support (including public assistance) or alimony.

14. 14 11 U.S.C. § 523 (a)(5) Domestic Support Obligations and interest on support obligations are non-dischargeable in bankruptcy. This change in the law makes is clear that previous court decisions allowing discharge of assigned support or arrears are no longer valid.

15. 15 11 USC Section 362(b)(2)(C) Income Withholding, Notice to Withhold Income, Earnings Assignments Orders, National Medical Support Assignments do not violate the automatic stay. 362(b)(2)(G) Revoking a professional or driver’s license does not violate the automatic stay. Reporting to credit bureaus does not violate the automatic stay. 362(b)(2)(E)

16. 16 11 USC Section 362(b)(2)(F) Intercepting a tax refund is not a violation.

17. 17 Notice to Withhold not honored Who gets credit? What not to do Who files the Proof of Claim Wages or Support Employer files Bankruptcy

18. 18 Objections to Claims Prima Facie filing Objection to Claim Motion The Proceeding Evidence Advanced Bankruptcy

19. 19 The Plan does not provide for the payment of support Object to confirmation Negotiate Child Support is non- dischargeable Not proposed in good faith Require amendment to Plan Objection to Chapter 13 Plan

20. 20 Complex Issues Motions to Avoid a lien Recordings are judicial liens Child Support Exemption

21. 21 Violations of the Stay Automatic Stay in Bankruptcy –What to do? –What not to do?

22. 22 Adversary Proceedings Bankruptcy based law suit or legal proceeding Core proceedings Non-core proceedings

23. 23 Relief from Stay Alter Ego Actions Preferential Transfers Fraudulent Conveyances Discovery

24. 24 Negotiations Typical scenario –You receive Notice Chapter 13 filed –Contact Debtor’s attorney –Next step? File a Proof of Claim Do not file a Proof of Claim –How to negotiate

25. 25 Negotiations Review case Good Pay/Bad Pay NTW or income withholding order or wage assignments are allowed for current and arrears Income Ratios/Child Support Obligation Trustee's fees (10%)

26. 26 Negotiations Modify Plan to allow for payment of child support and arrears outside of Plan (or part in Plan) and list debt as non-dischargeable Sent Notice to Withhold or Income Withholding Order or part NTW and part Proof of Claim for arrears (with knowledge and consent of debtor’s attorney)

27. 27 Bankruptcy is fun and easy Procedure Telephonic hearings are authorized Electronic filing is required, electronic docketing may be required

28. 28 Bankruptcy is fun and easy In re Garrett (E.D. Tex 2005) 315 B.R. 431 In re Charnock (9th Cir. BAP 2004) 318 B.R. 720 In re Cervantes (9th Cir. 2000) 219 F.3d 955 In re Lebowitz (9th Cir. 2000) 217 F.3d 799

29. 29 Bankruptcy is fun and easy In re Coker (C.D. CA. 1998) 232 B.R. 182 In re Pacana (9th Cir. BAP 1991) 125 B.R. 19 In re Donald Clifford Foster (9th Cir. 2003) 319 F.3d 495 In re: Wayne K. Crawford (7th Cir. 2003) 324 F.3d 539 In re Gruntz, 202 F.3d 1074 (9th Cir. 2000)

30. 30 Bankruptcy Exercise Situation Chapter 7 91113 You can continue to collect child support. You can continue to collect arrears. No Release a license Once the Petition in Bankruptcy is filed, you can send a wage assignment. You must release a property lien that was filed prior to the debtor’s filing for bankruptcy. No Discuss case options Yes.

31. 31 Bankruptcy Exercise Situation Chapter 791113 Repossessions are allowed. You can continue action to establish paternity. You can use a Civil Contempt proceeding to enforce the payment of debt. An action to modify support is not affected by filing of a bankruptcy. AAAA Yes.

32. 32 Bankruptcy Exercise Situation Chapter 7 91113 Credit reporting is allowable. You can file or record an Abstract of Support Judgment. You cannot negotiate an SLMS stipulation or inquire about payment on arrears. You cannot contact the debtor to find out when the next payment will be made. If the debtor requests a lien be lifted, refer the debtor to the bankruptcy court. Yes No Yes

33. 33 Bankruptcy is fun and easy Thank you. Thank CSDA. Please fill out your comment forms. Email if you have any questions. Tex.Ritter@co.nevada.ca.us

34. 34 Practical Bankruptcy Issues The Devil is in the Details Daniel L. Bell, San Bernardino DCSS, dbell@css.sbcounty.gov

35. 35 Where do you find the law? Bankruptcy Code Manual – West’s Bankruptcy Series Westlaw http://www.law.cornell.edu

36. 36 Where do you find BK information? http://pacer.psc.uscourts.gov You will need a PACER account to view documents online. Almost all Bankruptcy Courts nationwide allow or require electronic filing

37. 37 PACER Login/Start Screen

38. 38 Setting Enforcement Holds What holds are mandatory? What holds are discretionary? How do you decide?

39. 39 11 U.S.C. 362(b) 11 U.S.C. § 362(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay- (1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor; (2) under subsection (a) (A) of the commencement or continuation of a civil action or proceeding- (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence; (B) of the collection of a domestic support obligation from property that is not property of the estate; (C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute; (D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; (E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; (F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or (G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….

40. 40 Criminal Complaints 11 U.S.C. § 362(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay- (1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor; (2) under subsection (a) (A) of the commencement or continuation of a civil action or proceeding- (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence; (B) of the collection of a domestic support obligation from property that is not property of the estate; (C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute; (D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; (E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; (F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or (G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….

41. 41 Summons & Complaints 11 U.S.C. § 362(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay- (1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor; (2) under subsection (a) (A) of the commencement or continuation of a civil action or proceeding- (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence; (B) of the collection of a domestic support obligation from property that is not property of the estate; (C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute; (D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; (E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; (F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or (G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….

42. 42 Modifications 11 U.S.C. § 362(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay- (1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor; (2) under subsection (a) (A) of the commencement or continuation of a civil action or proceeding- (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence; (B) of the collection of a domestic support obligation from property that is not property of the estate; (C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute; (D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; (E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; (F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or (G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….

43. 43 Income Withholding 11 U.S.C. § 362(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay- (1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor; (2) under subsection (a) (A) of the commencement or continuation of a civil action or proceeding- (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence; (B) of the collection of a domestic support obligation from property that is not property of the estate; (C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute; (D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; (E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; (F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or (G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….

44. 44 Assets Don’t Do It. 11 U.S.C. § 362(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay- (1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor; (2) under subsection (a) (A) of the commencement or continuation of a civil action or proceeding- (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence; (B) of the collection of a domestic support obligation from property that is not property of the estate; (C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute; (D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; (E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; (F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or (G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….

45. 45 SLMS Suspension 11 U.S.C. § 362(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay- (1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor; (2) under subsection (a) (A) of the commencement or continuation of a civil action or proceeding- (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence; (B) of the collection of a domestic support obligation from property that is not property of the estate; (C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute; (D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; (E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; (F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or (G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….

46. 46 Credit Reporting 11 U.S.C. § 362(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay- (1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor; (2) under subsection (a) (A) of the commencement or continuation of a civil action or proceeding- (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence; (B) of the collection of a domestic support obligation from property that is not property of the estate; (C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute; (D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; (E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; (F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or (G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….

47. 47 Tax Intercepts 11 U.S.C. § 362(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay- (1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor; (2) under subsection (a) (A) of the commencement or continuation of a civil action or proceeding- (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence; (B) of the collection of a domestic support obligation from property that is not property of the estate; (C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute; (D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; (E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; ( F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or (G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….

48. 48 HICA 11 U.S.C. § 362(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay- (1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor; (2) under subsection (a) (A) of the commencement or continuation of a civil action or proceeding- (i) for the establishment of paternity; (ii) for the establishment or modification of an order for domestic support obligations; (iii) concerning child custody or visitation; (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or (v) regarding domestic violence; (B) of the collection of a domestic support obligation from property that is not property of the estate; (C) with respect to the withholding of income that is property of the estate r property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute; (D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; (E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; (F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or (G) of the enforcement of a medical obligation as specified under title IV of the Social Security Act;….

49. 49 Proof of Claim Should you continue direct enforcement? Should you file a Proof of Claim? Arrears Only – pay off balance in 3- 5 years What about COAP?

50. 50 Proof of Claim Problems Interest continues to accrue on Non-dischargeable debts Debtor will still have a balance even though he makes all the payments In re Groh Problem – Your claim may push the debtor over the unsecured debt limit in 11 U.S.C. 109(e)

51. 51 Proof of Claim Legal Actions – Bankruptcy Legal Action – Add Can’t find it under Activities & Forms. Attorney signs the Proof of Claim Caseworker signs the Proof of Service

52. 52 Proof of Claim Problems The Proof of Service form in CSE is fine as long as you happen to be filing in the Southern District (San Diego) Otherwise do Proof of Service outside the system. Electronic Signature problems

53. 53 Disclaimer In re Jameson How can a non-dischargeable debt be discharged in a bankruptcy Home-towned in Southern District of Alabama

54. 54 Thanks for your Attention If you have questions, please feel free to call or email.