bankruptcy Judge says when you make someone pay more than what they can afford then they just flee so that is justification to limit court ordered DSO’s to an amount less than what the state court ordered. In the instant case the ongoing DSO is for $375 a month, and the arrearage is almost $200k. Judge says if he makes the bankruptcy Debtor pay more than $300 a month then the Debtor will just pack his stuff and move to Houston, or El Paso or California or some other large metropolitan area and we will never find him again. The fight was over the plan language that said the bankruptcy debtor could pay $300 a month toward the allowed claim of $57k and continue to pay $300 a month toward that claim after discharge, but said nothing about the ongoing DSO amount, or interest on the principal arrearage which was reserved for later litigation in the plan language.

Judge interpretation, even though, he says he has no authority to change a DSO is that everyone meant, or should have meant $300 for arrearages and ongoing support because that is all the debtor can pay, although he states that the plan language is not very clear. A deadbeat parent with 200k in support arrears would be spending some time in jail, and paying 65% of his net income here in NY. How does someone accumulate 200k in arrears at the rate of $375 a month? That would take something like 40 years. He is saying the parties agreed to this modification through the bankruptcy confirmation order and lack of objection thereto. This sounds like the discharge by confirmation that the 10th Circuit approved in In re Andersen and subsequently overruled in ECMC v. Mersmann. If the DSO was modified by confirmation, does the DSO Obligee have a claim of lack of notice.

Given that this type of change should only be done by AP, the DSO Obligee should at least be served, pursuant to 7004 and Rule 4 with the plan and given the opportunity (30 days) to respond, rather than what we see in some jurisdictions where plan confirmation occurs shortly after the 341. The DSO Obligee needs an attorney with a good background in due process. The recipient did return to WVA state court, and the state court did calculate the interest of the pre-petition allowed claim of $57k, and then added up the post-petition arrearages and interest and reduced that amount to a judgment of about $200k with ongoing current support in the amount of $375. The state of WVA then started wage withholding for the $300 for the pre-petition amount–as agreed, and an additional amount according to support charts for post-petition amounts. The debtor sued the state of WVA for contempt of a confirmed bankruptcy plan

Judge found the state of WVA in contempt, but said it was not willful because the state of WVA obviously couldn’t understand the plan language, but that he, Judge was interpreting the agreed plan language to mean that the total monthly payment for the life of the debtor was limited to $300 regardless of the ongoing support amount or the total amount of the arrearages because he believes that’s what the parties should have known the plan language obviously meant. Therefore he was not modifying an existing DSO because the parties had already modified the DSO by agreeing to plan language that he interprets as modifing the DSO, and that the parties knew or should have known that’s what the plan language meant.

The state of WVA and the receipient disagree that they understood the plan language to mean that the DSO was being modified, and, as pointed out above, the argument on appeal is that (1) there was obviously no agreement to modify the DSO because the state of WVA would not have knowingly violated a federal court order, and Judge so stated that WVA didn’t understand the plan language to forbid what they did, and that no evidence was submitted to show they did– that since a plan is a contract—and all plans must be submitted by the debtor–ambiguities are construed against the drafter AND (2) as suggested above if a debtor wants to modify a DSO in a bankruptcy it must be done by AP.