In re: Timothy Bagley
I. Introduction
Before the Court is debtor Timothy Bagley‘s objection to Barbara Grady‘s amended claim for attorney‘s fees, his motion for contempt against Ms. Grady for alleged violation of the automatic stay, and confirmation of Mr. Bagley‘s third amended chapter 13 plan, to which Ms. Grady objects. See Claim No. 5-3, (the “Amended Claim“); Objection to Proof of Claim No. 5 (Doc. #188, the “Claim Objection“); Motion for Willful Contempt – Violation of Stay (Doc. #168, the “Stay Violation Motion“); Third Amended Chapter 13 Plan (Doc. #184, the “Third Amended Plan“); and Amended Objection to Confirmation of Plan (Doc. #205, the “Plan Objection“).
The resolution of these matters hinges on a threshold determination, namely, whether Ms. Grady‘s Amended Claim is a domestic support obligation (“DSO“) as defined by
II. Jurisdiction
The Court has jurisdiction over these matters under
III. Procedural Background & Factual Findings
This decision constitutes the Court‘s findings of fact and conclusions of law in accordance with Bankruptcy Rule 7052. The Court‘s factual findings are derived from the testimony given by Mr. Bagley, Rhonda Crosson, the mother of Mr. Bagley‘s minor child, Ms. Grady, and the Chapter 13 Trustee as well as the documents admitted into evidence.
A. Pre-Petition Events
Ms. Crosson and Mr. Bagley are not married and share a minor child. Ms. Crosson retained Ms. Grady in July 2014 to obtain a restraining order against Mr. Bagley following a breakdown in their relationship. Subsequently, Mr. Bagley commenced a child custody action in the Rhode Island Family Court (the “Family Court“). Ms. Crosson has continued to retain Ms. Grady as counsel in the tumultuous and protracted proceedings before the Family Court.
Mr. Bagley was ordered to pay Ms. Crosson $75.00 per week in child support (the “Child Support“) for their minor child. In September 2017, the Family Court also ordered Mr. Bagley to pay Ms. Crosson $64.00 a month for his contribution toward medical and dental insurance
On January 9, 2019, the Family Court held an evidentiary hearing to determine if Mr. Bagley had paid the Support Obligations. The Family Court found that Mr. Bagley had failed to make the required payments and ordered him to forthwith pay Ms. Crosson $3,022.00 for such past due obligations, warning that failure to do so would result in his incarceration. The hearing was continued to February 25, 2019. (See Exhibit P-1).
After the January hearing, Ms. Grady completed a “Child Support Case Registration and Payment Form (CSS-1)” on behalf of Ms. Crosson. (Exhibit 1-A at 1, the “CSS Form“). The CSS Form listed the Child Support and the monthly insurance premium payments of $64.00, effective October 16, 2017. (Exhibit 1-A at 2). Ms. Grady checked the “full service” box, which provided that these obligations would be “paid through the Family Court and the Office of Child Support Services (“OCSS“) to provide full enforcement.” (Exhibit 1-A at 3).
At the continued February hearing, the Family Court found Mr. Bagley in willful contempt for failure to pay the outstanding payments, and he was incarcerated. (Exhibit P-2). He was subsequently released and ordered to pay $350.00 to Ms. Crosson. (Exhibit P-3). The Court further enjoined Mr. Bagley from spending his real estate commissions until Ms. Crosson was paid in full. (Exhibit P-3). In late April 2019, the Family Court held a follow-up hearing on Mr. Bagley‘s failure to pay Support Obligations and Ms. Crosson‘s related motion to hold Mr.
On June 19, 2019, the Family Court held a hearing on the nonpayment of the Support Obligations and Ms. Grady‘s request for counsel fees. Following that hearing, the Family Court ordered Mr. Bagley to pay Ms. Crosson‘s attorney fees of $2,945.00. (Exhibit P-4, the “July 2019 Order“). Mr. Bagley failed to comply. In February 2021, Ms. Crosson again moved in the Family Court to enforce its prior orders and hold Mr. Bagley in contempt. (Exhibit 1-F).
The Family Court commenced a trial in July 2022 concerning Mr. Bagley‘s failure to pay Support Obligations and Ms. Crosson‘s attorney‘s fee request. This trial spanned numerous dates and eventually concluded on February 27, 2023 (the “Trial“). Ms. Grady then moved for an assessment of fees for her services relating to the Trial.2
On March 13, 2023, the Family Court issued an order finding Mr. Bagley in willful contempt for his failure to pay court ordered orthodontic expenses, unreimbursed health insurance premiums and the previously ordered counsel fee. (Exhibit 1-D, the “March 2023 Order“). Yet again, the Family Court incarcerated Mr. Bagley pending payment of ordered payments totaling $6,363.00. At some point during the trial proceedings Mr. Bagley made substantial payment towards this outstanding amount, but not the full amount. He was released from incarceration with the condition that he pay $1,500.00 towards Ms. Grady‘s attorney‘s fees.
B. The Bankruptcy Filing and Post-Petition Events
Mr. Bagley filed his chapter 13 bankruptcy petition on November 27, 2023. On Bankruptcy Schedule A/B, Mr. Bagley listed his residence, and on Bankruptcy Schedule D, he listed a claim of $225,623.00, secured by his residence. On Bankruptcy Schedule E/F, he listed the Internal Revenue Service (“IRS“), Ms. Crosson, and Ms. Grady as unsecured creditors. (Exhibit B-1). He scheduled a claim of Ms. Crosson of $1,915.00 for “orthodontic expenses” and a claim of Ms. Grady for attorney‘s fees of $9,930.00. (Exhibit B-1).
Ms. Grady timely filed a proof of claim for $2,945.00 based on “court-ordered attorney fee award per order of 6/19/19 plus interest” entitled to priority as a DSO under
The Trustee objected to Mr. Bagley‘s initial chapter 13 plan (Doc. #28), on the grounds (among other things) that Mr. Bagley had not filed his federal and state tax returns, and the plan
The Court held a hearing on July 17, 2024, on Mr. Bagley‘s first amended plan and the Trustee‘s objection. Ms. Grady appeared and advised the Court of her intention to amend her claim once quantified by the Family Court to include additional fees she had incurred as of the petition date. Without having sufficient information about the nature or details of her claim, the Court indicated that Ms. Grady would need to seek relief from the automatic stay to do so. The Court also acknowledged the concurrent jurisdiction of the Family Court and noted Mr. Bagley‘s inability to relitigate the amounts of such claims in the Bankruptcy Court.
After retaining counsel to represent her in the bankruptcy proceeding, Ms. Grady moved for relief from the automatic stay under
During the pendency of this case, the Court held periodic preliminary hearings on the status of Mr. Bagley‘s various chapter 13 plans, the status of his tax returns and the Claim Objection. However, the Court deferred holding an evidentiary hearing on plan confirmation or the Claim Objection until they were ripe for consideration.
On December 3, 2024, Ms. Grady filed an amended motion for attorney‘s fees in the Family Court seeking to quantity the fees she had incurred for the Trial and the Family Court‘s March 2023 Order. She also sought a declaration that such fees, along with fees incurred post-petition related to the bankruptcy case, constitute DSOs. In support, Ms. Grady submitted an amended affidavit of attorney‘s fees, which included two itemized statements of services rendered to Ms. Crosson in the Family Court proceedings from June 2022 through October 2024 in the total amount of $15,568.00. (Doc. #168 at 11; Exhibit 1-E). The components of that fee request are comprised of both pre-petition and post-petition services. The pre-petition services rendered from June 2022 through March 2023 totaled $11,070.00. These fees relate to the Trial
After Ms. Grady filed her fee request motion in Family Court, Mr. Bagley filed the Stay Violation Motion in this Court. On April 9, 2025, the Family Court held a hearing on Ms. Grady‘s fee request and later issued a detailed order finding, among other things, that the pre-petition fees of $11,070.00 incurred by Ms. Grady were for her “efforts to enforce the prior Orders of this Court related to payment of child support, uninsured medical and orthodontic expenses for the minor child, health insurance premiums for the minor child and for payment of previously ordered counsel fees.” (Exhibit 1-C; Exhibit N, Part 2 at 1-3) (the “DSO Order“). The Family Court declined to grant Ms. Grady‘s request for additional fees of $4,498.00 relating to the bankruptcy case but awarded her $1,800 in legal fees for appearing at the April 9 hearing “to establish and quantify her legal fees related to the domestic support obligations.” DSO Order at ¶ 4.
In sum, the Family Court found that Mr. Bagley “owe[ed] a total of $12,870.00 as a domestic support obligation under the bankruptcy code for legal fees due to Attorney Barbara Grady as of April 9, 2025.” DSO Order at ¶ 6. The Family Court also expressly stated in the DSO Order that “the sole purpose of the [April 9] hearing was to establish and quantify the legal fees incurred by [Ms. Crosson] in connection with her efforts to enforce existing court orders for child related expenses, no enforcement action will be taken.” DSO Order at ¶ 1. Finally, the Family Court concluded that its assessment of the fees was excepted from the automatic stay
Shortly thereafter, Ms. Grady amended her claim, Claim No. 5-2, amending that claim further by filing the Amended Claim on April 21, 2025 (Claim No. 5-3; Exhibit N), seeking $12,870.00 in attorney‘s fees for “child support, and contempt action incurred on behalf of mother of child, Rhonda Crosson.”4 Ms. Grady attached the DSO Order to the Amended Claim.
Further complicating matters, Mr. Bagley amended his Bankruptcy Schedules I and J (Doc. #177; Exhibit J), updating his employment as a medical sales representative and listing gross monthly wages of $4,500.00, and take-home pay of $3,629.00 (Doc. #177; Exhibit J at 1-2). On Bankruptcy Schedule J, Mr. Bagley listed a monthly mortgage expense of $2,394.00 and monthly net income of $196.00. (Doc. #177; Exhibit J at 3-5).
On May 23, 2025, Mr. Bagley filed the Third Amended Plan (his fourth chapter 13 plan). This plan proposes monthly payments of $225.00 for 42 months; turnover of any tax returns during the plan term that exceed $500.00; an increase of the monthly plan payment if Support Obligations end (as of the hearing date his child was 17 years old); maintenance of monthly mortgage payments; full payment of the IRS and the Rhode Island Division of Taxation priority claims totaling $11,462.00; and a modest dividend to unsecured creditors. As noted, Ms. Grady objected to the plan. (Doc. #186).
Mr. Bagley objected to Ms. Grady‘s Amended Claim (Doc. #188), and she filed a response (Doc. #195). She later filed the Plan Objection (Doc. #205) and moved to convert the case to chapter 7 (Doc. #207). While all of this was pending, in June 2025, the mortgage holder
C. The Evidentiary Hearing and Post-Hearing Events
After this lengthy but necessary recitation, the Court can now move on to the evidentiary hearing on these matters.
Ms. Grady testified that she filed the Amended Claim seeking $12,870.00 as a creditor in her own right. She emphasized the fees listed in her Amended Claim were incurred in relation to the Trial on motions to enforce the Support Obligations which Mr. Bagley repeatedly failed to pay. She explained that the fees were incurred for services rendered during the period of July 2022 through February 2023 (Exhibit 1-D), as well as for her time expended at the April 9, 2025, Family Court hearing. Ms. Grady clarified that the fees did not include fees Mr. Bagley had paid to purge himself of prior contempt orders for non-payment of Support Obligations. See May 2023 Order. Ms. Grady testified that the billing statement for fees and costs totaling $11,070.00 was for services rendered pre-petition, despite two entries erroneously dated “3/21/24” and “3/23/24.” She explained that those entries were in fact for service rendered on “3/21/23” and “3/23/23,” and that she attended hearings before the Family Court on those dates to enforce the Family Court‘s payment directive per the March 2023 Order.
In her testimony, Ms. Grady noted that although she had earlier sought to quantify the additional fees incurred after the Trial‘s conclusion in February 2023, a hearing could not proceed because of Mr. Bagley‘s appeal of the March 2023 Order. So, on the petition date Ms. Grady had motions pending in the Family Court to assess the additional pre-petition fees she had
As to the allegations of a stay violation, she believed that her motion in the Family Court to quantify her fees was excepted from the automatic stay by
Ms. Grady confirmed that Mr. Bagley was present for the April 9 hearing and had an opportunity to object and examine witnesses. Regarding the total fee award of $15,568.00 she had sought in Family Court, Ms. Grady testified that she believed all the fees were DSOs but confirmed that the Family Court did not award her the $4,498.00 in fees incurred in connection with the bankruptcy proceeding. The Court finds Ms. Grady‘s testimony credible.
When questioned about the CSS Form, Ms. Grady noted that once the form is submitted, the individual entitled to support obligations (be it for spousal or child support) receives assistance through the OCSS in the enforcement and collection of court-ordered support payments. She was very clear that the claim to support payments, however, remains with the individual entitled to such payments, characterizing the OCSS as a “pass through” for court-ordered support payments and medical insurance obligations.
Ms. Crosson‘s testimony corroborated much of Ms. Grady‘s testimony about the repeated need to seek enforcement of the Family Court orders through the filing of motions to hold Mr. Bagley in contempt of those orders. Ms. Crosson testified that Mr. Bagley had “always been in arrears” in his payments ordered by the Family Court, and his non-compliance resulted, on more than one occasion, in his incarceration. To collect such delinquent payments, she continued to
For his part, Mr. Bagley declined to present evidence or testimony to advance confirmation of the Third Amended Plan, focusing only on the Claim Objection and the Stay Violation Motion through his questioning of Ms. Grady and Ms. Crosson. The issues regarding plan confirmation, however, were addressed by Ms. Grady through cross examination of Mr. Bagley as an adverse witness.
Upon extensive questioning about his income and living expenses, Mr. Bagley‘s answers were vague, and frankly, the Court finds some of his responses not credible. For instance, despite what he listed on Bankruptcy Schedule J, the documents he produced in response to Ms. Grady‘s subpoena did not show regular monthly payments of his water bill. Mr. Bagley was unsure how much his water bills were and stated that he only paid them “when convenient.” Regarding his failure to produce utility bills, Mr. Bagley testified that he has not had electricity at his house since January 2025, because he did not need electricity, even though his teenage son was residing with him at the time. He also testified that he does not pay for a cell phone, that his mother pays for his car insurance, and that he had reduced his living expenses to make his plan payments to the Trustee. Additionally, Mr. Bagley was unable to recall his income during January 2025 through March 2025. Moreover, although he stated that with his new employment he was entitled to sales commissions, he had no idea how much that was or when he would
Finally, when asked about the status of his mortgage Mr. Bagley reluctantly acknowledged that he was delinquent in his payments. He admitted that he had fallen in arrears twice during the pendency of his case, most recently this year. He explained that he took proactive steps with the mortgagee to address these defaults. He obtained the first loan modification agreement in April 2024, resulting in a substantial increase in the monthly payments. Mr. Bagley stated that he when he fell behind again, he contacted the lender who agreed to capitalize the post-petition mortgage arrearage of $12,000.00 into the outstanding loan. As previously noted, the Second LM Motion filed in June 2025 was withdrawn by the mortgagee before the Court could consider it.
Addressing plan confirmation, the Trustee testified that even though Mr. Bagley was current in his plan payments, he had reservations about the feasibility of the Third Amended Plan based on Mr. Bagley‘s testimony at the hearing. He further testified that the Third Amended Plan would not be confirmable if Ms. Grady‘s Amended Claim is a DSO.
With that backdrop, the Court will address the merits of each of these matters.
IV. The Claim Objection
Before delving into whether Ms. Grady‘s Amended Claim is a DSO, the Court must address Mr. Bagley‘s assertion that it is a new claim and, therefore, must be disallowed as untimely.
The requirements for filing and allowance of proofs of claims are set forth in both the Bankruptcy Code and Bankruptcy Rules. See Municipality of Carolina v. Gonzalez (In re Gonzalez), 490 B.R. 642, 647 (B.A.P. 1st Cir. 2013). To receive a distribution under a chapter 13 plan, a creditor holding a pre-petition claim (whether secured or unsecured) must timely file a proof of claim. See Bankruptcy Rule 3002(a); see also
A claim objection “does not deprive the proof of claim of presumptive validity unless the objection is supported by substantial evidence.” Juniper Dev. Grp. v. Kahn (In re Hemingway Transp., Inc.), 993 F.2d 915, 925 (1st Cir. 1993). Nevertheless, Ms. Grady, as “the party seeking priority treatment of the [c]laim carries the ultimate burden of establishing that [she is] so entitled.” In re Corson, 629 B.R. 1, 4 (Bankr. D.N.H. 2021) (citing Mason v. Official Comm. of Unsecured Creditors (In re FBI Distribution Corp.), 330 F.3d 36, 41-42 (1st Cir. 2003) (stating that “statutory priorities are narrowly construed, and the burden of proving entitlement rests with
In a chapter 13 case, tardily filed proofs of claims are disallowed unless they meet one of the exceptions set forth in Bankruptcy Rule 3002(c). But if the amendment of a claim is proper and the original claim timely filed, then the amended claim relates back to the original claim and is deemed timely filed. See In re Martinez, 513 B.R. 779, 784-85 (Bankr. D.P.R. 2014) (discussing permissibility and mechanics of amending a timely filed proof of claim).
B. Amendments to Proofs of Claims
Amendments of timely filed proofs of claims are liberally allowed. See In re Kolstad, 928 F.2d 171, 175 (5th Cir. 1991) (holding that late-filed amendments to a timely filed claim must be “liberally permitted to ‘cure a defect in the claim as originally filed, to describe the claim with greater particularity or to plead a new theory of recovery on the facts set forth in the original claim,‘” assuming the amendments do not “set forth wholly new grounds of liability.” (quoting United States v. International Horizons, Inc. (In re International Horizons, Inc.), 751 F.2d 1213, 1216 (11th Cir. 1985)). “Amendments to proofs of claim timely filed are to be freely allowed, whether for purposes of particularizing the amount due under a previously-asserted right to payment, or simply to cure technical defects in the original proof of claim.” Woburn Associates v. Kahn (In re Hemingway Transp. Inc.), 954 F.2d 1, 10 (1st Cir. 1992).
Whether to permit “an amendment to a timely-filed proof of claim rests with the sound discretion of a bankruptcy judge.” In re Martinez, 513 B.R. at 784. “[A]llowance of an amended proof of claim is an equitable determination often approached using a two-part test—(1) was a timely similar claim asserted against the bankruptcy estate by a prior formal proof of claim or informal proof of claim; and (2) is it equitable to permit the amendment.” Vargas” cite=“664 B.R. 198” pinpoint=“204-05” court=“Bankr. D.P.R.” date=“2024“>In re Rios Vargas, 664 B.R. 198, 204-05 (Bankr. D.P.R. 2024) (quoting Keith M. Lundin, Lundin on Chapter 13, § 133.4, at [4], LundinOnChapter13.com (last visited August 27, 2024)).
The First Circuit has fine-tuned the framework for bankruptcy courts in this circuit to utilize when evaluating an amendment to a proof of claim. See In re Hemingway Transp. Inc., 954 F.2d at 10.
[Bankruptcy courts] must scrutinize both the substance of the proposed amendment and the original proof of claim to ensure that the amendment meets three criteria. First, the proposed amendment must not be a veiled attempt to assert a distinctly new right to payment as to which the debtor‘s estate was not fairly alerted by the original proof of claim. Second, the amendment must not result in unfair prejudice to other holders of unsecured claims against the estate. Third, the need to amend must not be the product of bad faith or dilatory tactics on the part of the claimant.
Id. (citations omitted).
“[A]s a general rule, amendments intended merely to increase the amount of a claim grounded in the same right to payment are not considered ‘new’ [or superseding] claims under the Code.” Id. Thus, “the fact that a subsequent proof of claim is for a larger sum than that earlier proof does not prevent the latter from amending the former.” In re Crane Rental Co., Inc., 341 B.R. 118, 121 (Bankr. D. Mass. 2006) (quoting In re Hanscom Retail Foods, Inc., 96 B.R. 33, 35 (Bankr. E.D. Pa. 1988)). But if a claimant seeks to alter the underlying nature of the claim, the amendment constitutes a new claim separate from the original filed claim. See In re Metro Transportation, Co., 117 B.R. 143, 148 (Bankr. E.D. Pa 1990) (stating “where a claimant attempts to change the nature of a proof of claim, such as when the taxing authority attempts to increase its proof of claim by adding different types of taxes . . ., such amendments have generally been disallowed.“).
For the last prong of this test, there must be more than delay in the filing of the amendment or increasing the amount of the claim. The focus is upon the claimant‘s improper conduct, such as dilatory tactics, or efforts to mislead, deceive or take unfair advantage by filing the amended claim. “In the context of claim amendments, . . . the case law on bad faith and dilatory tactics more precisely turns on whether there is any ‘evidence whatever from which to infer’ that the claimant ‘intentionally refrained, out of any improper or dilatory purpose’ from providing in the original proof of claim the information set forth in the amended claim . . . . Not every delay amounts to bad faith or suggest a dilatory motive.” Lending, LLC” cite=“671 B.R. 831” pinpoint=“841-42” court=“1st Cir. BAP” date=“2025“>Rios Vargas v. Planet Home Lending, LLC (In re Vargas), 671 B.R. 831, 841-42 (B.A.P. 1st Cir. 2025) (quoting In re Hemingway Transp. Inc., 954 F.2d at 12).
C. Allowance of the Amended Claim
The Court finds that Ms. Grady‘s amendment of her Initial Claim is permissible. The amendment does not alter the nature of the claim asserted in the Initial Claim; both are based upon fee awards by the Family Court after Ms. Crosson repeatedly had to pursue enforcement and collection of unpaid Support Obligations. The Court reaches this determination in view of the protracted Family Court contempt proceedings necessitated by Mr. Bagley‘s failure to make the payments required by the that court‘s July 2019 and March 2023 Orders, and the delay in the assessment of the amount of Ms. Grady‘s fees occasioned by Mr. Bagley‘s appeal of the latter order. It is clear that the Amended Claim “particulariz[ed] the amount due under a previously-asserted right to payment.” In re Hemingway Transp. Inc., 954 F.2d at 10.
Moreover, there is nothing inequitable in permitting the amendment of the Initial Claim. “The overriding purpose of proofs of claim and the rules of law that require their timely submission is to provide a debtor‘s creditors and other parties in interest with notice of the claims against the estate.” In re FTX Trading Ltd., 669 B.R. 298, 306 (Bankr. D. Del. 2025). Here, Mr. Bagley can hardly claim surprise or prejudice by the Amended Claim. He was an active participant in multiple Family Court proceedings for his contempt of the support orders. And he knew that the amount of Ms. Grady‘s fees significantly exceeded the amount stated in the Initial Claim, having listed her on his bankruptcy schedules as an unsecured creditor with an undisputed claim for “attorneys fees” in the amount of $9,930.00.
Nor can he complain about the delay in the quantification of Ms. Grady‘s fees caused by his appeal of the March 2023 Order. Ms. Grady‘s delay in filing the Amended Claim was not the
Finally, the Court concludes that there is no unfair prejudice in permitting the amendment. Mr. Bagley‘s plan has not been confirmed. The delay in holding a confirmation hearing is largely attributable to Mr. Bagley‘s failure to timely file tax returns, failure to provide for treatment of the secured claim against his residence in earlier versions of his chapter 13 plan, and changes in his financial circumstances. Further, the record reflects delay on Mr. Bagley‘s part in responding, and then only partially, to discovery requests propounded by Ms. Grady in connection with the Claim Objection and plan confirmation.5
The circumstances in this case are a far cry from those in which creditors are prejudiced by unreasonable or unfair delay tactics in amending a claim. See In re Martinez, 513 B.R. at 782, 786-87) (finding creditor‘s claim amendment seeking to increase the secured portion of its
In short, the amendment of the Initial Claim is permissible, and the Amended Claim is timely because it relates back to the Initial Claim.
The Court now must determine whether the Amended Claim qualifies as a DSO entitled to priority treatment under the Third Amended Plan. The Court concludes that the fees awarded to Ms. Grady are in fact DSOs under
D. Priority Treatment of the DSO Claim
The definition of a DSO is found in
(A) owed to or recoverable by – (i) a spouse, former spouse, or child of the debtor or such child‘s parent, legal guardian, or responsible relative; or (ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support . . . of such spouse, former spouse, or child of the debtor or such child‘s parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of– (i) a separation agreement, divorce decree, or property settlement agreement; [or] (ii) an order of the court of record; . . . and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child‘s parent, legal guardian, or responsible relative for the purpose of collecting the debt.
Proofs of claims for a post-petition DSO are not allowable by virtue of
“Determining whether a claim is a domestic support obligation entitled to priority treatment is a question of federal law.” In re Corson, 629 B.R. at 5.6 Under federal law, that examination “depends not on the label attached to the obligation but on the purpose it was intended to serve by the court that fashioned it.” In re Angelo, 480 B.R. 70, 86 (Bankr. D. Mass. 2012). As the Court in In re Babineau, explained, the inquiry focuses on the totality of the circumstances:
Courts look at the totality of circumstances of a particular case in deciding whether an obligation was intended to qualify as a DSO, examining a range of factors including: the language used by the state court in the document establishing the obligation, whether the property award appears to “assuage need” as discerned from the structure of the award, and the financial circumstances of the recipients at the time of the relevant agreement.
Applying this test to the present case, “the classification of ancillary obligations, such as attorneys’ fees, should follow the classification of the primary obligation in determining their nature . . . .” Id. Importantly, a court “is not bound by titles and classifications of obligations in the pleadings and instead looks at the intent of the order awarding attorney‘s fees and how the award was intended to function.” Id. at *4.
The parties dispute, either directly or impliedly, whether the requirements of subsections (A), (B), (C) and (D) of
These arguments are not supported by the Code or applicable law. Courts disagree about whether a debt owed to an entity other than one enumerated in
The fact that [the attorney fee award] is payable to [the former spouse‘s attorney] does not disqualify it from being a domestic support obligation. Each dollar paid on the [attorney fee award] satisfies a dollar of [the former spouse‘s] obligation to [her attorney]. The [attorney fee award] entered in a divorce proceeding to which [the former spouse] but not [her attorney] was a party, and the Contempt Judgment for its nonpayment was entered on a complaint brought in her name, not [her attorney‘s]. Therefore, it is an obligation for the benefit of [the former spouse], and payments on it to [her attorney] are, in effect, payments to [the former spouse]. The [attorney fee award] is therefore “owed to and recoverable by” [the former spouse] within the meaning of the definition of domestic support obligation . . . .
Nor is the fact that Mr. Bagley and Ms. Crosson were never married relevant. The statutory DSO definition expressly includes child support obligations and does not preclude attorney‘s fees awarded in connection with the enforcement and collection of delinquent child support obligations. In re Rugiero, 502 F. App‘x 436, 439 (6th Cir. 2012). The rationale of the Rugiero court is also compelling:
Nothing in the statute requires the “child‘s parent[s]” to be married at the time of the award or indeed ever to have been married . . . [and] [n]othing in the statute precludes an attorney‘s fee award from being treated as “in the nature of . . . support.” Were it otherwise, a litigious boyfriend, to use one example that comes to mind, could make life miserable for his girlfriend by waging a costly custody dispute over their children, one that the girlfriend might not be able to fend off based on her earnings (and other child-support payments) alone. That is why many courts have treated fee awards as “support” payments; it is the only way to allow some parents to vindicate their rights in court.
The Family Court was correct in determining that the $12,870.00 fee award to Ms. Grady
Similarly, the Support Obligations fall within the scope of
Lastly, the Court finds that Mr. Bagley‘s reliance on
Mr. Bagley‘s remaining arguments are easily dispatched. To qualify as a DSO, there is no statutory requirement that the fees awarded to Ms. Grady on behalf of Ms. Crosson be based upon a finding of “willful and malicious” contempt of the Family Court‘s orders. It appears that he may be confusing the non-discharge provisions of Code
Finally, Mr. Bagley‘s argument that it was unreasonable for Ms. Crosson to incur these fees when she had “free services” for the enforcement and collection of his delinquent payments through OCSS is equally meritless. Nothing in the CSS Form precluded Ms. Crosson from engaging Ms. Grady to pursue the Support Obligations that Mr. Bagley failed to pay. Ms. Grady‘s uncontradicted testimony is that it often takes the state agency months to act when support payments are delinquent. Additionally, the agency will not pursue collection of obligations other than the ordered Child Support and insurance premium payments. Thus, parties entitled to payment of court-ordered medical and other expenses must pursue collection of these obligations themselves or through their attorney. What is unreasonable is Mr. Bagley‘s insistence that Ms. Crosson wait months to collect the Support Obligations or forego collection
The bottom line is that Ms. Grady‘s total fees of $12,870.00 are DSOs within the meaning of
V. The Stay Violation Motion
Bankruptcy Code
Therefore, the Court starts its analysis with
Ms. Grady invokes
A. Analysis
Mr. Bagley has not satisfied his burden. Having determined that the fees listed in the Amended Claim are pre-and post-petition DSOs under
VI. Plan Confirmation
Ms. Grady objects to confirmation of the Third Amended Plan under
A. Full Payment of Priority Claims
The Third Amended Plan does not satisfy
B. The Outstanding Post-Petition DSO
Ms. Grady is also correct that the Third Amended Plan is not confirmable because it does not comply with
Given that the Third Amended Plan fails to comply with
C. Feasibility of Third Amended Plan
The Bankruptcy Code requires the Court to find that a proposed chapter 13 plan is feasible before it can be confirmed. See
Setting aside Ms. Grady‘s Amended Claim, it is abundantly clear from the record and Mr. Bagley‘s testimony that he is constrained by an extremely tight budget just to enable his plan payments. He has forgone electric service to his residence, which most people consider essential to a minimal standard of living. The Court is skeptical of Mr. Bagley‘s protestations that he does not need this service as there are other ways to light the residence and his explanation that when
The tip off here to the plan‘s infeasibility is Mr. Bagley‘s current $12,000.00 default in his post-petition mortgage payments. He did not explain what happened to the $12,000.00 in mortgage payments he did not make. Although the Third Amended Plan proposes to maintain the post-petition monthly mortgage payments, the evidence and the record demonstrates his inability to do so, without considering the increase in his monthly plan payments that will be required to pay Ms. Grady‘s DSO claim.10 Essentially, Mr. Bagley has made his plan payments to the Trustee at the expense of his on-going post-petition mortgage payments. How he will cure this post-petition arrearage is unknown given the withdrawal of the Second LM Motion.
The Court gives little credence to Mr. Bagley‘s vague assertion that his income will increase because of sales commissions he expects to earn. As noted earlier, Mr. Bagley produced no evidence about such commissions, could not provide the amount of commissions he had allegedly accrued, and did not provide evidence about the amount of commissions he expected to earn in the future. The Court shares the Trustee‘s concerns about the feasibility of the Third Amended Plan and finds that it is simply not feasible.
VII. Conclusion
For the detailed reasons discussed in this decision, the Court holds that: (a) Ms. Grady‘s Amended Claim, both the pre-petition and post-petition components, is a DSO as defined by the Bankruptcy Code; (b) the Amended Claim is allowed as a first priority claim in the amount of $11,070.00; (c) Ms. Grady did not violate the automatic stay when pursuing quantification of her
Date: October 29, 2025
Diane Finkle
Judge Diane Finkle
Bankruptcy Judge