Cite as: Keith M. Lundin, Lundin On Chapter 13, § 12.9, at ¶ ____, LundinOnChapter13.com (last visited __________).
Income from a former spouse for alimony, maintenance or child support can constitute regular income for eligibility purposes.1 Typically, these payments are not sufficient by themselves to fund a Chapter 13 plan but are one component of the debtor’s income included in the Chapter 13 budget.2
To prove the regularity of alimony, maintenance or support payments, counsel should determine that there is an underlying court order or settlement agreement that requires payments and that there is a history of compliance. Often, alimony, maintenance or support payments are irregularly received by the debtor and have been one factor contributing to the debtor’s financial problems. If these payments are a substantial component of the debtor’s income, it may be necessary to solidify the regularity of those payments through proceedings in a domestic relations court simultaneously with the Chapter 13 case. These are difficult situations because of the uncertain outcome, expense and timing of an action to collect alimony, maintenance or support from a nonfiling spouse or former spouse. The use of an income deduction order as a means of policing or ensuring the payment of support obligations is discussed elsewhere.3
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)4 complicated the treatment of alimony, maintenance and support in Chapter 13 cases filed after October 17, 2005. Somewhat oversimplified, BAPCPA reconstituted alimony, maintenance and support as “domestic support obligations.”5 For purposes of the projected disposable income test at confirmation under § 1325(b), child support payments, foster care payments and disability payments for a dependent child are excluded.6 Also, payments by the debtor for a domestic support obligation are deducted from current monthly income to determine projected disposable income.7 The net result is that child support incoming to a debtor and domestic support obligations outgoing from a debtor are not available to unsecured creditors at confirmation through the projected disposable income test.
Notwithstanding these substantial changes to the treatment of domestic support at confirmation, BAPCPA made no changes to the treatment of alimony, maintenance or support at the eligibility stage of a Chapter 13 case. There is no exclusion of support from income for purposes of the regular income eligibility requirement. Schedule I, Official Form 106I, requires the debtor to detail all “family support payments” regularly received by the debtor, by a nonfiling spouse or by a dependent of the debtor. It remains soundly arguable that domestic support of whatever form is properly included in “income” for eligibility purposes notwithstanding that some or all support would be excluded from projected disposable income at confirmation.
1 In re Taylor, 15 B.R. 596 (Bankr. D. Ariz. Dec. 2, 1981) (Mooreman) (child support payments).
2 See Schedule I, Official Form 106I, discussed in § 36.16 Schedules I and J—Income and Expenditures.
4 Pub. L. No. 109-8, 119 Stat. 23 (2005).
5 See 11 U.S.C. § 101(14A), discussed in § 57.7 Preconfirmation Classification Disputes, § 73.3 Priority Claims Added or Changed by BAPCPA, § 73.6 Treatment of Priority Claims Changed by BAPCPA, § 113.3 Domestic Support Obligations Must Be Current and § 159.5 Domestic Support Obligations: § 523(a)(5).
6 See 11 U.S.C. § 1325(b)(2), discussed in § 92.3 Current Monthly Income: The Baseline and § 99.3 Child Support, Foster Care and Disability Payments.