Debt for Fees Related to Incarceration of Minor Not Dischargeable

Posted by NCBRC - August 5, 2014

A Bankruptcy Appellate Panel for the Ninth Circuit found that debt based on expenses incurred by the county juvenile justice system for the care of the debtor’s son while incarcerated is nondischargeable Rivera v. Orange County Probation Dept. (In re Rivera), No. 13-1476 (B.A.P. 9th Cir. June 4, 2014).

California law provides that parents of incarcerated minors are liable for expenses related to the child’s care while incarcerated. In this case, when the debtor filed for bankruptcy she owed the county probation department $9,905.40 under the state law. She listed Orange County as a priority, unsecured, creditor in her petition. The trustee found the case to be no-asset and closed it. The county continued to seek payment of the debt, however, on the basis that it was nondischargeable as a domestic support obligation under section 523(a)(5). The Bankruptcy court agreed.

On appeal, the BAP compared section 523(a)(5) as it currently stands with its pre-BAPCPA version. It found that pre-BAPCPA, in order to be deemed nondischargeable, the debt had to be owed to the spouse, former spouse or child. BAPCPA expanded the definition of domestic support obligation to include a debt owed to a government agency. Section 101(14A)(B) also expanded the nature of “domestic support” to include “alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor . . . .”  The court concluded that “[a]pplying the plain language of the Code provisions to the facts of this case, we conclude that the debt owed by Debtor to Orange County qualifies as a nondischargeable domestic support obligation because, without factual dispute, that debt: (1) accrued before the order of relief; (2) is owed to a governmental unit; (3) was incurred for the support of Debtor’s child as ‘assistance provided by a governmental unit;’ (4) was established before Debtor’s bankruptcy by an order of the state court; and (5) has not been assigned to a nongovernmental entity for collection.”

The court rejected the debtor’s argument that the expenses did not represent domestic support but were, in fact, disguised “taxes” designed to reimburse the county for costs incurred in fulfilling its obligation to protect society. The court found that the charges were specifically for such things as the actual costs of food, clothing, medical and personal supplies up to $30/day. Although the panel recognized that federal law governs the definition of domestic support, it was guided by a state supreme court ruling finding that the expenses were “for the reasonable costs expended for support and maintenance of the minor while placed outside the family home.” Cnty. of San Mateo v. Dell J., 762 P.2d 1202 (Cal. 1988). Thus, the charges represented quintessential support expenses. The panel also found that the post-2005 inclusion of governmental agencies as recipients of domestic support obligations made clear that the nondischarge provision was not limited to costs incurred in the domestic environment. The panel noted that a post-BAPCPA case finding that costs involved in the incarceration of a minor cannot be deemed “domestic support obligations” failed to adequately consider the changes to the Code in 2005.

The debtor filed a notice of appeal to the Ninth Circuit on July 3, 2014.

Rivera BAP 9th opinion

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