496 B.R. 553
8th Cir. BAP2013Background
- Hernandez appeals a bankruptcy court order allowing a DHHS claim of $924.39 as a priority domestic support obligation.
- State court ordered Martinez-Sanchez to pay $422/month child support; payments were enforceable by income withholding to Hernandez.
- Martinez-Sanchez died in 2005; one child entered Nebraska DHHS care 6/11/2007 and remained in foster care through 12/22/2008.
- DHHS paid foster care costs during care; later, child support payments allegedly resumed via identity theft; total DHHS payments to Hernandez approximately $1,898.94 through 9/2011.
- Nebraska DHHS informed Hernandez in 2008 that those payments tied to the state ward should have stayed with DHHS to defray foster care expenses; Hernandez did not appeal.
- Hernandez filed Chapter 13 in 2012; DHHS objected to plan for failure to treat debt as priority and for full payment under §1322(a)(2); plan denial followed in 2012.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the DHHS debt is in the nature of child support | Hernandez contends the debt is not child support because it stems from fraud and is not properly categorized by the DHHS. | DHHS argues the debt is in the nature of support of a child under §101(14A)(B) regardless of payment source. | Yes; the debt is in the nature of support of Hernandez's child. |
Key Cases Cited
- Williams v. Williams, 703 F.2d 1055 (8th Cir. 1983) (state-law characterization not binding on bankruptcy court)
- Stover v. Phegley (In re Phegley), 443 B.R. 154 (8th Cir. BAP 2011) (determine nature of support by function served, not payment source)
- Zahn v. Fink (In re Zahn), 526 F.3d 1140 (8th Cir. 2008) (interlocutory appeal doctrine for plan confirmation)