602 B.R. 682
Bankr. N.D. Ill.2019Background
- Debtor Steven Welsch filed a chapter 13 bankruptcy; ex-spouse Trenda Welsch moved in bankruptcy court to lift the automatic stay so she could ask the state court to modify an existing child support order to include college expenses.
- The state-court support order predated the bankruptcy filing and already provided for child support.
- The bankruptcy court considered whether the automatic stay barred state-court proceedings to modify domestic support orders or required a formal stay modification.
- The court reviewed exceptions to the automatic stay under 11 U.S.C. § 362(b)(2) and the Bankruptcy Code definition of “domestic support obligation.”
- The court also addressed whether state courts may hold status hearings or continue domestic relations matters while a bankruptcy case is pending.
Issues
| Issue | Plaintiff's Argument (Welsch) | Defendant's Argument (Debtor) | Held |
|---|---|---|---|
| Whether the automatic stay bars a state-court motion to modify an existing child-support order to add college expenses | Welsch argued the stay prevented the state court from modifying the support order unless the stay were lifted | Debtor argued modification of domestic support is excepted from the stay under § 362(b)(2) and § 101(14A) | Court held the stay does not bar modification of support orders; lifting the stay was unnecessary |
| Whether state courts may determine stay applicability and proceed without bankruptcy-court relief | Welsch implied the state judge needed bankruptcy-court guidance and a stay modification | Debtor argued state courts may decide whether the stay applies and proceed when it does not | Court held state courts may determine the stay's applicability and proceed accordingly; bankruptcy-court modification not required for such determinations |
| Whether holding status hearings or continuing domestic matters violates the automatic stay | Welsch noted the state judge was reluctant to proceed or continue matters without formal relief | Debtor argued status hearings/continuances to monitor the bankruptcy do not advance collection and thus do not violate the stay | Court held status hearings and continuances to preserve the status quo or monitor the bankruptcy do not violate the stay |
| Whether the stay bars division of marital property or collection from estate property | Welsch did not dispute that estate property is protected | Debtor argued division of property that became property of the estate and collection from estate property are stayed | Court held the stay does bar division of property that is property of the estate and collection from estate property (especially post-petition income in chapter 13) |
Key Cases Cited
- Eskanos & Adler P.C. v. Leentein, 309 F.3d 1210 (9th Cir. 2002) (creditor violated stay by filing and pursuing post-petition collection action; distinguishes mere status continuances)
- In re Peters, 101 F.3d 618 (9th Cir. 1996) (postponing foreclosure sale did not violate the stay)
- Dennis v. A.H. Robins Co., Inc., 860 F.2d 871 (8th Cir. 1988) (court may require counsel to appear and advise on bankruptcy progress without violating stay)
- In re Roach, 660 F.2d 1316 (9th Cir. 1981) (postponement of sale did not violate the stay)
- In re Hall-Walker, 445 B.R. 873 (Bankr. N.D. Ill.) (decision criticized for treating state-court continuances and status hearings as stay violations)