The new law takes away the balancing of hardships in sub paragraphs (A) and (B) between the debtor and creditor spouse.  Therefore, in a Chapter 7 case it is safe to state that any domestic support obligation will be nondischargeable.  The term domestic support obligation is defined very broadly to include all debts to a spouse, former spouse or child incurred during a divorce or separation regardless of whether the debt is designated as a “support” obligation or not.  (Also included in the definition is interest that accrues on the underlying debt pursuant to nonbankruptcy law).  11 U.S.C. §101(14A).  Non-support obligations are still dischargeable in a Chapter 13 case, but such cases are limited to instances where a Chapter 13 plan is confirmed and completed.  In other words, under the old Code a debtor could potentially discharge non-support claims in a Chapter 13 without completing a confirmed plan if the was sufficient facts to support a hardship discharge.  This is no longer an option available to Chapter 13 debtors.  11 U.S.C. §1328(a).

Another change in regards to the dischargeability of domestic support obligations is in the timing.  Before it was up to the creditor spouse /plaintiff to demonstrate that the debtor incurred the debt in connection with a divorce or separation.  11 U.S.C. §523(a)(5).  Additionally, the plaintiff would have to file a complaint objecting to the discharge within 60 days of the first meeting of creditors.  Now such a complaint can be filed at any time. 11 U.S.C. §523(c).

Priority

11 U.S.C. § 507 addresses the priority with which every debt is treated under a bankruptcy case.  A debt which is treated with a higher priority than a secondary or subordinate debt must be paid in full before the subordinate debt receives any payment.  Under the new Code, domestic support obligations are now accorded the first priority status, after all secured debts are paid, but before other priority debts such as trustee’s fees and attorney’s fees, unpaid wages, and taxes.  Prior to the reform, support debts were given the seventh priority.  This change is a huge advance for support creditors, as they will be paid before any other unsecured creditor, including trustees and attorneys.

Automatic stay

One of the greatest protections the bankruptcy code offers a debtor is the automatic stay.  Once a debtor files bankruptcy, all collection and enforcement actions against the debtor are automatically halted due to the provisions of 11 U.S.C. § 362.  However, § 362 has been edited to create many new exceptions to the automatic stay for proceedings that are related to support obligations.  Specifically, the following eight types of proceedings are now exempted from the automatic stay:  (1) action to establish child custody or visitation; (2) dissolution of marriage; (3) domestic violence; (4) withholding of income that is property of the bankrupt estate for payment of domestic support obligations; (5) suspension of drivers’ licenses and professional licenses; (6) reporting of overdue support owed by a parent to certain consumer reporting agencies; (7) interception of specified tax refunds; and (8) enforcement of medical obligations under tile IV, part D (Child support and Establishment of Paternity) of the Social Security Act.

Consumer Counseling and Debt Management Certification

In practice, prior to the new Code, debtors would often times file an incomplete bankruptcy or “face filing” at the last minute in order to stop a foreclosure.  The new Code has hindered these emergency filings by requiring that debtors partake in credit counseling prior to filing.  Bankruptcy judges have held that the language of the act is absolutely rigid in this requirement for credit counseling prior to filing, and it has led to some upset debtors, attorneys and judges.

Protection from preference actions

Another area where support obligations are strengthened against bankruptcy is in the realm of preferences.  A preference occurs in bankruptcy when the debtor has “preferred” one of his creditors (by paying them money) to the exclusion of other creditors.  More specifically, when a payment is made to a creditor within 90 days of filing bankruptcy that gives a creditor more than they would receive under a Chapter 7 bankruptcy , that payment is normally avoidable, and the money paid can be recovered for the benefit of all creditors.  Even under the old Code, however, there was an exception made for support payments.  Payments towards a support obligation normally would not be avoidable, no matter how much was paid.  This provision has been strengthened even further under the new Code by inclusion of a much broader definition of the kind of domestic support obligation that is covered.  As with the other provisions discussed above, what was formerly limited to support obligations has been expanded to most any kind of debt that arises under divorce or separation, including property divisions and hold-harmless obligations.  11 U.S.C. §547(c)(7).
   
Miscellaneous provisions        

There are four additional changes which the BAPCPA has effected.  First of all, new language has been inserted into §§ 1129, 1208, 1222, 1225, 1307, 1322, 1325, 1328 to ensure that a Chapter 11, Chapter 12 , or Chapter 13 debt-repayment plan cannot be confirmed by the court until it has been certified that the debtor has paid all domestic support obligations that have become payable post-petition.  In addition, a case can be converted to a chapter 7 or can be dismissed entirely if a failure to pay support payments is shown. 
11 U.S.C. § 522 has also been amended to provide that property that is exempt from the bankruptcy estate is nonetheless reachable in order to satisfy a debt arising from nondischargeable domestic support obligations regardless of any provisions of nonbankruptcy law. 
Another change worth noting is that income payments for post-petition domestic support obligations are excluded from “disposable income” for purposes of a Chapter 12 confirmation plan.
Finally, the new Code has set forth several affirmative duties for the bankruptcy trustee.  Specifically, the trustee must provide written notice to the person who is owed support obligation  of several rights they have in collecting the debt.  The notice must also explain fully the impact that the debtor’s bankruptcy will have on the support obligation.  Most importantly, the trustee must inform the creditor of the debtor’s last known address and the name and address of the debtor’s last known employer.  11 U.S.C. §704.

Summary:
BAPCPA changes to the Bankruptcy Code affecting family law:
- Broadens the definition of domestic support obligations to include more types of debt that are nondischargeable and eliminates the exceptions to nondischargeability that previously were available for certain support-related debts; § 523(a)
- Unsecured claims for domestic support obligations are given first priority status; § 507(a)(1)
- Excepts from the automatic stay eight different kinds of domestic proceedings; § 362
- Broadens the definition of domestic support obligations to include more types of debts that can not be avoided by the trustee as a preferential transfer; § 547
- Court confirmation of a debt repayment plan is conditioned upon a certification that the debtor has paid in full all support obligations that have become due after the petition filing date; §§ 1129, 1208, 1222, 1225, 1307, 1322, 1325, and 1328
-No discharge in Chapter 13 without certification that all domestic support obligations are paid per plan terms; §1328(a)
- Modifies guidelines governing property exempt from the bankruptcy estate to declare such property liable for a debt arising from domestic support obligations; § 522
- Excludes income payments for postpetition domestic support obligations from "disposable income" for purposes of a Chapter 12 confirmation plan; § 1225(b)(2)(A)
- Gives affirmative duties to the trustee to notify domestic support creditors and the relevant state agencies of relevant information such as the status of the debtor’s bankruptcy and last known address; §§ 704, 1106, 1202, 1302

Thanks to Shelley D. Krohn, Esq., Shareholder of Goldsmith & Guymon, P.C. and Andrew Root, J.D. for their assistance in writing this article.