Web posted and Copyright © March 1, 1999, American Bankruptcy Institute.
Web posted and Copyright © March 1,
1999, American Bankruptcy Institute.
Congress of the United States
Washington, DC 20515
THE BANKRUPTCY REFORM ACT IMPROVES COLLECTION
OF CHILD SUPPORT AND ALIMONY IN
BANKRUPTCY PROCEEDINGS
Dear Democratic Colleague:
As original Democratic cosponsors of the Bankruptcy Reform Act of 1999, we feel that it is important to explain how our bipartisan reform measure enhances the collection of child support and alimony payments.
Under current bankruptcy law, child support and alimony payments rank seventh on the priority list, behind such things as attorneys’ fees. Our legislation would ensure that child support and alimony payments come first, in every case, in a bankruptcy proceeding. No obligation is more important than that of a parent to his or her child. This legislation will ensure that those payments get the priority they deserve.
Additionally, the bill closes a number of loopholes in current law that debtors take advantage of to evade or delay making child support and alimony payments. Among other things, the bill provides that the automatic stay does not apply to a state child support collection agency that seeks to impose or enforce a wage order for these obligations. In other words, a debtor cannot put off collection efforts or delay making child support payments simply by filing for bankruptcy. Also, the legislation makes both confirmation and discharge of Chapter 13 repayment plans contingent upon the debtor’s complete payment of child support and alimony obligations.
These are not modest steps. They are real, effective changes that will make a difference to single parents around the country. That’s why a number of child support enforcement agencies, including the California Family Support Council, as well as 27 state attorneys general, have endorsed the bill as an effective tool in the fight to improve the collection of these payments in bankruptcy proceedings.
The bankruptcy reform legislation we have introduced is virtually identical to the conference report that received 300 votes in the House last October. It is a sensible, balanced, common-sense bill that will make our bankruptcy system more efficient and effective but without denying bankruptcy relief to those who truly need it. And it will provide long-overdue enhancements to child support and alimony collection efforts.
If you are interested in learning more about the child support provisions as included in the bill or to consponsor (sic) H.R. 833, please contact Sharon Ringley (Boucher)x53861 or Peter Lawson (Moran) x54376.
Sincerely,
Rep. Boucher
Rep. Jim Moran
Rep. Frost
Rep. Menendez
Rep. Kennedy
Rep. Tauscher
Rep. Dooley
Rep. Rothman
Rep. Wynn
Rep. Hooley
Rep. Roemer
Rep. Velazquez
Rep. Ralph Hall
Rep. Andrews
Rep. Adam Smith
Rep. Jim Mahoney
Dear Senator:
I am writing on behalf of the National Child Support Enforcement Association (NCSEA) about the importance of including strong child support provisions in Congressional bankruptcy legislation. NCSEA is committed to ensuring that both parents live up to the responsibilities that come with parenthood- including paying legally owed child support payments. The bankruptcy legislation pending before Congress forwards this goal.
Under current law, children living with one biological parent are often disadvantaged when the parent who owes support seeks protection in the bankruptcy court. All too frequently, these families find themselves in competition with other creditors for the debtor-parent’s limited assets. The effect of this competition can have an acutely negative impact on the economic circumstances of the separated family.
NCSEA believes that our nation’s bankruptcy laws regarding child support should be reformed to provide greater protection to families who are owed such financial support. NCSEA urges Congress to adopt the following improvements to strengthen and clarify the rights of separated families during and following the bankruptcy proceedings of a support obligor. Specifically, NCSEA recommends bankruptcy reforms that:
- Exempt mandated child support enforcement tools such as income withholding orders, license revocations, credit reporting procedures and interception of tax refunds from the effect of the automatic stay;
- Eliminate the dischargeability of all child support debt and treat all child support debt in a similar manner;
- Give all child support debt a high priority in bankruptcy payment plans;
- Prevent confirmation of a bankruptcy plan or prevent discharge if a debtor’s child support payments are not current after a bankruptcy petition is filed.
NCSEA believes such changes would favor family self-sufficiency and would contribute to a stronger economic future for children and families who are owed financial support. (Please see attached policy resolution.)
The child support provisions included in the Senate bankruptcy bill, S.1301, substantially address all but the second of these four recommendations, and the child support provisions in House bill H.R. 3150, substantially accomplish all of NCSEA’s goals. NCSEA lauds Congress for its efforts to make child-support related improvements to bankruptcy law.
N
CSEA, representing 55,000 child support professionals across America, stands ready to assist Congress to guarantee that the child support provisions in the bankruptcy bill are good for children and families. NCSEA- through education, training, and advocacy- works to ensure that children receive financial and emotional support from both parents. Our members include public program administrators, judges, hearing officers, attorneys, social workers, caseworkers, and child advocates, as well as representatives of other government agencies and corporate partners.NCSEA believes it is important to ensure the compatibility of bankruptcy and child support laws, especially in such complex areas as the distribution of child support. NCSEA hopes we can be of assistance to you as you consider this legislation. Please feel free to contact Kelly Thompson, NCSEA Government Relations Director, at 202-624-8180 if you have any questions or would like to discuss these issues.
Respectfully,
Joel Bankes
Executive Director
National Child Support Enforcement Association
Attachment
99 Canal Center Plaza, Suite 510 Alexandria,
Virginia 22314
Telephone: (703) 549-9222
Fax: (703) 836-3195
Office of the President
September 2, 1998
Honorable Trent Lott
Senate Majority Leader
230 Capitol Building
Washington, DC 20510-7010
Dear Senator Lott:
I am writing on behalf of the National District Attorneys Association, an organization of more than 7,000 local prosecutors throughout the United States. As a large segment of these prosecutors are engaged in enforcing child support obligations pursuant to Title IV-D of the federal Social Security Act, our Association has reviewed the bankruptcy reform legislation currently pending in Congress, specifically S1301, the "Consumer Bankruptcy Reform Act." We believe that the bill would substantially assist our efforts to collect support for the children and spouses of obligor-debtors who have filed for relief in bankruptcy.
We are aware of the criticism that this legislation would pit child support creditors against financial institutions in competition for debt collections after bankruptcy, which could leave support creditors worse off then they are now. It is our belief that this criticism is either disingenuous or that it is made by those not engaged in the collection of support and who do not understand the support collection process.
Local prosecutors who are involved with support cases do not believe that after bankruptcy it would be more difficult to collect support simply because credit card debts are not discharged. To the contrary, support creditors have vastly more effective, and meaningful, collection remedies before a bankruptcy case is filed, or after the case is completed, than any other financial institution. These remedies include routine collection methods as well as civil contempt of court and criminal prosecution. It is under current law, during bankruptcy, that support collectors have the greatest difficulty because they are in competition with all other creditors for bankruptcy estate assets and because their most effective collections remedies have been stayed.
The enormous enhancements to support collection remedies provided in S.1301, and the companion legislation in the House, make this reform legislation worthy of support. These bills, together, would eliminate from the reach of the automatic stay, and thus the bankruptcy process, the collection of support by federally mandated income or wage withholding procedures. It would also exempt from the stay other federally required collection processes such as license revocation and credit reporting. The bills would prevent confirmation of bankruptcy plans or discharge of debts in a bankruptcy case, with respect to debtors who do make support payments, after filing for bankruptcy protection. In addition, distinctions between assigned and unassigned support would be largely eliminated, to the benefit of taxpayers who fund public assistance programs and to the formerly assisted parents and children who will, under the 1996 welfare reform legislation, be the direct beneficiaries of support previously assigned to the government.
While we understand that legitimate concerns have been expressed regarding many provisions of the bankruptcy reform legislation, our comments are limited to only those provisions of the bills that would affect the enforcement of support obligations. As prosecutors, we have a legal and moral responsibility to collect support on behalf of children and parents living in our jurisdictions. In keeping with this, we believe that this legislation provides a major improvement to the problem facing child support creditors in bankruptcy proceedings.
We urge your support for these reforms through passage of S.1301.
Sincerely,
John R. Justice
Solicitor, Sixth Judicial District, Chester, South Carolina
President, National District Attorneys Association
cc: Honorable John R. Young, Past NDAA Vice president, District
Attorney, First Judicial District
Honorable Edward J. Peters, NDAA State Director, District
Attorney, Seventh Judicial District
Ms. Lisa Purdie, Executive Director, Mississippi Prosecutor
Training