Cite as: Keith M. Lundin, Lundin On Chapter 13, § 53.16, at ¶ ____, LundinOnChapter13.com (last visited __________).
Chapter 13 trustees have new responsibilities to give notices to the holders of domestic support obligations (DSOs) under § 1302. The entire bankruptcy community faces the challenge of dysfunctional statutory notice provisions added by BAPCPA to § 342.1
Section 1302 was amended by BAPCPA to require Chapter 13 trustees to give notices to each holder of a DSO and to the state child support enforcement agencies where each holder resides. Detailed elsewhere,2 11 U.S.C. § 101(14A) defines DSO broadly to include all debts in the nature of alimony, maintenance or support that accrue before or after the petition, established or subject to establishment that are owed to or recoverable by just about anyone.3 Section 1302(b)(6) states that if a Chapter 13 debtor owes a DSO, the trustee must perform the new noticing responsibilities in § 1302(d):
(d)(1) In a case described in subsection (b)(6) to which subsection (b)(6) applies, the trustee shall—
(A)(i) provide written notice to the holder of the claim described in subsection (b)(6) of such claim and of the right of such holder to use the services of the State child support enforcement agency established under sections 464 and 466 of the Social Security Act for the State in which such holder resides, for assistance in collecting child support during and after the case under this title; and
(ii) include in the notice provided under clause (i) the address and telephone number of such State child support enforcement agency;
(B)(i) provide written notice to such State child support enforcement agency of such claim; and
(ii) include in the notice provided under clause (i) the name, address, and telephone number of such holder; and
(C) at such time as the debtor is granted a discharge under section 1328, provide written notice to such holder and to such State child support enforcement agency of—
(i) the granting of the discharge;
(ii) the last recent known address of the debtor;
(iii) the last recent known name and address of the debtor's employer; and
(iv) the name of each creditor that holds a claim that—
(I) is not discharged under paragraph (2) or (4) of section 523(a); or
(II) was reaffirmed by the debtor under section 524(c).
(2)(A) The holder of a claim described in subsection (b)(6) or the State child support enforcement agency of the State in which such holder resides may request from a creditor described in paragraph (1)(C)(iv) the last known address of the debtor.
(B) Notwithstanding any other provision of law, a creditor that makes a disclosure of a last known address of a debtor in connection with a request made under subparagraph (A) shall not be liable by reason of making that disclosure.4
In language not always clear,5 new § 1302(d) requires four notices: two when the debtor “is granted a discharge under section 1328”6 and two at an unspecified time during the Chapter 13 case. The new section requires Chapter 13 trustees to give two written notices to each holder of a DSO and two written notices to the support enforcement agency for the state in which the DSO holder resides. It is reasonable to speculate that the first two notices—one to the DSO holder and the other to the support enforcement agency for the state in which the DSO holder resides—will be given early in the Chapter 13 case because these first notices relate to collecting the DSO claim during the Chapter 13 case.
The first written notice to the DSO holder must include notice “of such claim” and notice “of the right of such holder to use the services of the State child support enforcement agency . . . for assistance in collecting child support during and after the case under this title.”7 This specificity is potentially confusing because a DSO is much broader under BAPCPA than “child support.” The House Report that accompanied BAPCPA repeatedly refers to the collection of “child support” without acknowledging that many DSOs will not involve child support.
The first written notice to the holder of a DSO must include the address and phone number of the appropriate state child support enforcement agency. Either debtors will supply this information somewhere in the statement and schedules or trustees will find a nationwide list of child support enforcement agencies, including telephone numbers.8
The rest of the content of the first notice to the DSO holder is not clear from the statute. Does “notice . . . of such claim” include the amount scheduled by the debtor? Is any additional information about the debtor required—for example, the Chapter 13 case filing information? The new subsection does not require information about the proposed Chapter 13 plan. The House Report states that the first notice to the DSO holder must “explain the claimant’s right to payment under the applicable chapter of the Bankruptcy Code.”9 There is no provision of the statute requiring the trustee to explain rights to payments to each DSO claimant. This would be difficult before confirmation and might have to be tailored to each DSO holder. An obvious first question is whether the regular notice of commencement of the Chapter 13 case would satisfy the first notice requirement if the name, address and phone number of the applicable state child support enforcement agency is added to that notice.
The first notice to the child support enforcement agency for the state in which the DSO claimant resides must include the name, address and telephone number of the claim holder. The name and address of the claim holder is easy enough—it is required when the debtor schedules the DSO as a priority debt in Schedule B to Official Form 6.10 But telephone numbers are not a requirement in that schedule and debtors are the only reasonable source for a telephone number for each DSO holder.
There are privacy issues here. BAPCPA enacted a new § 112 which provides that “information regarding a minor child” may only be disclosed “in a nonpublic record that is maintained by the court and made available by the court for examination by the United States trustee, the trustee, and the auditor (if any) serving under section 586(f) of title 28.”11 To enable the Chapter 13 trustee to satisfy § 1302(d), the debtor must provide the name, address and telephone number of each minor child who holds a DSO claim in a nonpublic filing that the Chapter 13 trustee can access to create the new notices. Given that most judicial districts now use the electronic case filing (ECF) system, creating and maintaining restricted access lists of this sort is a significant task ahead. BAPCPA provides no privacy protection for the telephone number of an ex-spouse or other adult holder of a DSO.
The second set of new DSO notices must be given by the Chapter 13 trustee when the debtor is “granted a discharge.”12 In most districts, the discharge in a Chapter 13 case is entered by the court after the trustee signals the completion of payments and the trustee receives a copy electronically. Many new exceptions to discharge added to the Bankruptcy Code by BAPCPA—including one that may require a hearing after the completion of payments under a plan13—will delay entry of discharge in some Chapter 13 cases. The second set of new DSO notices is required at “such time” as the debtor is granted a discharge. Trustees should probably wait until the discharge order is actually entered by the bankruptcy court.
The second notices go (again) to each holder of a DSO and to the child support enforcement agency for the state in which each DSO holder resides. The content of the second notices is different and more detailed than the first set. Section 1302(d)(1)(C) lists four kinds of information that must be in the second notices:
The granting of the discharge to the debtor.14 The new statute is no more specific than that. Chapter 13 trustees will decide whether to include the date the discharge was entered or other information about discharge. Perhaps the standard notice of discharge used by the clerk and sent to all creditors satisfies this requirement—but for the fact that it is not a notice by the Chapter 13 trustee. It looks like DSO holders will get two notices that a discharge has been granted to the debtor, one from the court and one from the Chapter 13 trustee.
The “last recent known address of the debtor.”15 “Recent” must mean something here, perhaps that the Chapter 13 trustee is expected to keep up with address changes for the debtor during the Chapter 13 case. Of course, Chapter 13 trustees do this anyway and will already have the most recent address supplied by the debtor. Does “known” mean anything more than whatever address information has been provided by the debtor?
Putting the debtor’s last known address on the second notice gives the DSO holder that most recent known address information. This creates some disincentive in Chapter 13 cases for debtors to keep the trustee apprised of address changes during the case.
The “last recent known name and address of the debtor’s employer.”16 In Chapter 13 cases in which there is an income deduction order under § 1325(c),17 the trustee will have a “recent” name and address for the debtor’s employer and it will be easy to include that information on the second notice to each DSO holder. It is not obvious how the trustee will know the last recent name and address of the debtor’s employer when there is no income deduction order in the case. Schedule I of Official Form 618 requires the name and address of the debtor’s employer at the time of filing the Chapter 13 petition. In districts that do not routinely enter income deduction orders, it is not routine for Chapter 13 debtors to amend the employer name and address information whenever employment changes during the case. In many Chapter 13 cases, the last known name and address of the debtor’s employer will be three to five years old when the debtor is granted a discharge and the second notice is sent to each DSO holder.
The name of each creditor that holds a nondischargeable claim under § 523(a)(2) or (4); and the name of each creditor that holds a claim that was reaffirmed under § 524(c).19 The logic behind this new notice requirement is thin and the wording is enigmatic. Why require notice to the holder of a DSO only with respect to claims that are nondischargeable under § 523(a)(2) and (4)? Assuming that the DSO holder has some use for information about (other) nondischargeable debts, after BAPCPA, there are many debts that are nondischargeable in a Chapter 13 case.20 Was the new exception to discharge for debts described in § 523(a)(2) and (4)21 singled out for special notice to DSO holders for some reason?
Why require notice to DSO holders of reaffirmations in Chapter 13 cases? Did the drafters of this new requirement know that reaffirmations are nonexistent in Chapter 13 practice in most districts?
Chapter 13 trustees will not be parties to nondischargeability litigation under § 523(a)(2) and (4) nor will Chapter 13 trustees be parties to any reaffirmation that might surface after BAPCPA. But Chapter 13 trustees must determine which creditors hold debts that are not discharged under § 523(a)(2) or (4) and which debts were reaffirmed under § 524(c) to provide the information required in the second notice to each DSO holder. Perhaps Chapter 13 trustees will study the docket sheet in every Chapter 13 case at the time of discharge to see if any reaffirmation agreements have been filed and to see if there are references to adversary proceedings.22 This will be an expensive task in tens of thousands of Chapter 13 cases for no certain benefit to DSO holders. In this regard, do you care to speculate why Congress wanted state child support collection agencies to be informed of the names of creditors holding nondischargeable debts under § 523(a)(2) and (4) or debts that were reaffirmed under § 524(c) at the end of a Chapter 13 case?
Perhaps the answer to the last question is found in new § 1302(d)(2)(A). This BAPCPA addition empowers a DSO holder or state child support enforcement agency to request the “last known [no mention of ‘recent’] address” of the debtor from a creditor with a nondischargeable debt under § 523(a)(2) or (4) or from a creditor with a reaffirmed debt under § 524(c). The form of this “request” is not specified. Will a letter or phone call do? How will creditors know the identity or legitimacy of the requestor? The new section only authorizes the requestor to request the debtor’s last known address. Is the creditor at risk to answer any other question?
Nothing in new § 1302(d) suggests that the DSO holder or the state child support enforcement agency can obtain the debtor’s last known address from the trustee or from anyone else in the case other than from a creditor with the specified nondischargeable or reaffirmed debt. The new statute provides no consequence if the creditor delays providing, refuses to disclose or just doesn’t know the debtor’s last known address.
New § 1302(d)(2)(B) protects the specified creditor that discloses the last known address of the debtor: “notwithstanding any other provision of law” the creditor “shall not be liable” for disclosing the last known address of a debtor upon request from the holder of a DSO or the child support enforcement agency for the state in which the DSO holder resides.23 No similar protection is extended to the trustee, to a debtor’s attorney or to anyone else in a Chapter 13 case other than a creditor with a debt nondischargeable under § 523(a)(2) or (4) or a debt that was reaffirmed under § 524(c). Chapter 13 trustees should consider this when designing office procedures to manage the inevitable requests for information from the holders of DSOs. The multiple new notices required by BAPCPA will inevitably generate thousands of inquiries from former spouses and child support representatives—if for no other reason than because the required notices will be confusing.
New § 1302(d) is a really roundabout effort to assist DSO claimants with collection after discharge in Chapter 13 cases by putting the DSO claimant and the state child support agency in touch with creditors that have claims that will also be collectible from the debtor after discharge. The theory seems to be that the DSO holder will be assisted by knowing the names of other creditors that are also trying to collect debts from the debtor after discharge. Is it realistic that non-DSO creditors with nondischargeable claims will unselfishly help DSO claimants to collect their competing debts after discharge in Chapter 13 cases? If a creditor wanders into a reaffirmation with a Chapter 13 debtor, is that creditor likely to help the holder of a DSO find the debtor to collect the DSO claim?
Why did Congress thrust the Chapter 13 trustee into the middle of this misconceived arrangement? If the goal is to give DSO claim holders current information about the debtor’s address and the name of the debtor’s employer at discharge in a Chapter 13 case, why not just require Chapter 13 debtors to supply that information to DSO holders at the end of a Chapter 13 case? The elaborate multi-phase noticing scheme imposed by new § 1302(d) will require great effort and expense by Chapter 13 trustees and by some creditors without offering much hope that DSO claimants will be advantaged by the process.
1 See §§ 365.1 [ Section 342: Notice in Chapter 13 Cases after BAPCPA ] § 4.3 Section 342: Notice What Didn’t Happen, 374.1 [ List of Creditors—DSOs and § 342 Considerations ] § 36.5 List of Creditors—DSOs and § 342 Considerations and 418.1 [ New § 342 Noticing Issues ] § 53.17 § 342 Noticing Issues for further discussion of 11 U.S.C. § 342.
2 See §§ 428.1 [ Domestic Support Obligations: Preconfirmation Rights ] § 57.5 Domestic Support Obligations: Preconfirmation Rights after BAPCPA, 440.1 [ New and Changed Priority Claims ] § 73.3 Priority Claims Added or Changed by BAPCPA and 519.1 [ Domestic Support Obligations ] § 136.21 Domestic Support Obligations after BAPCPA.
3 11 U.S.C. § 101(14A) provides:
The term “domestic support obligation” means a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is (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.
4 11 U.S.C. § 1302(d).
5 The introductory phrase in 11 U.S.C. § 1302(d)(1)—“in a case described in subsection (b)(6) to which subsection (b)(6) applies”—is either redundant or there are cases “described in” (b)(6) to which (b)(6) does not apply.
6 See 11 U.S.C. § 1302(d)(2), discussed below in this section.
7 11 U.S.C. § 1302(d)(1)(A)(i).
8 The Justice Department has posted to the U.S. trustee Web site a link to information about child support enforcement agencies. See www.usdoj.gov/ust/.
9 H.R. Rep. No. 109-31, at 76.
10 See § 35.6 [ Schedule E—Priority Claims ] § 36.12 Schedule E—Priority Claims.
11 11 U.S.C. § 112. What happened to the bankruptcy administrator?
12 11 U.S.C. § 1302(d)(1)(C).
13 See 11 U.S.C. § 1328(h), discussed in § 547.1 [ Delay of Discharge: § 522(q)(1) and Pending Proceedings ] § 156.6 Delay of Discharge: § 522(q)(1) and Pending Proceedings.
14 11 U.S.C. § 1302(d)(1)(C)(i).
15 11 U.S.C. § 1302(d)(1)(C)(ii) (emphasis added).
16 11 U.S.C. § 1302(d)(1)(C)(iii) (emphasis added).
17 See §§ 248.1 [ Order to Debtor’s Employer ] § 125.1 Order to Debtor’s Employer–252.1 [ Special Deduction Order Problems: Entitlements, Pensions and Government Employers ] § 125.7 Special Deduction Order Problems: Entitlements, Pensions and Government Employers.
18 See § 35.10 [ Schedules I and J—Income and Expenditures ] § 36.16 Schedules I and J—Income and Expenditures.
19 11 U.S.C. § 1302(d)(1)(C)(iv)(I), (II).
21 See 11 U.S.C. § 1328(a)(2), discussed in §§ 549.1 [ False Representations and Fraud: § 523(a)(2) ] § 159.2 False Representations and Fraud: § 523(a)(2) and 550.1 [ Fraud and Defalcation: § 523(a)(4) ] § 159.3 Fraud and Defalcation: § 523(a)(4).
22 Even then, not all reaffirmation agreements are filed with the court and not every bankruptcy clerk dockets adversary proceeding information in the main case file.
23 11 U.S.C. § 1302(d)(2)(B).