06 Jul Attorney’s Fees Awarded in a State Court Support Proceding: Dischargeable in Bankruptcy?
The United States Bankruptcy Code clearly states that domestic support obligations such as alimony and child support are not dischargeable in bankruptcy. Section 523(a)(5) excepts from discharge a “domestic support obligation.” But what about attorneyâ€™s fees awarded to the spouse who is awarded this support?
Often, when a state court awards child support or alimony it also awards attorneys fees to the prevailing spouse. Should this attorney fee award also be non-dischargeable, or are attorneyâ€™s fees a separate category of debt, and treated like any other unsecured debt?
Section 523 of the Bankruptcy Code does not address the fate of this class of attorneyâ€™s fees but bankruptcy judges have weighed in. In the 11th Circuit, where I practice, attorneyâ€™s fees arising from a post-dissolution custody [or alimony] action constitutes support for the former spouse where the award is based on ability to pay.
Georgia law, specifically, provides that an award of attorneyâ€™s fees in a divorce or support proceding is based on the relative need and ability of the parties to pay. Bankruptcy judges, therefore, will assume that the state court judge considered the financial circumstances of both parties before issuing an attorneyâ€™s fee award, thus the attorneyâ€™s fee portion of the award constitutes a form of domestic support.
Therefore, while your bankruptcy case is controlled by federal law, state law considerations do arise. A federal bankruptcy judge will not change the rules that apply to your divorce or support matter just because one or both litigants have entered bankruptcy.
The rules in your jurisdiction may be different, although I suspect that the holdings of the 11th Circuit is the majority approach. Note, however, that an Oklahoma judge reached a contrary conclusion about attorney’s fees in a case involving attorney’s fees arising from state court litigation over visitation.
In any case, if you are involved in a support or alimony dispute, it would be a good idea to consider the implications of bankruptcy – should you or your adversary decide to file. Bankruptcy judges generally will not inject themselves into a domestic relations dispute and they will rely on the findings of the state court judge. As a litigant in the state court proceedings you and your attorney may be able to suggest language that will be included in a final divorce or support order that can protect your interests.
by Jonathan Ginsberg, Atlanta bankruptcy
Jonathan Ginsberg, Esq.
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