Can the interest on child support be dismissed in bankruptcy in Utah?

Question: Can the interest on child support be dismissed in bankruptcy in Utah?

Question Detail: The principal is all paid, but the buildup interest is still owed. Can it be discharged?

Answer: No, as far as I can see. I couldn’t find any authority for Utah on this subject, but I was able to find In re Foster, 319 F.3d 495 (9th Cir. 2003) a case in the 9th Circuit that addresses the issue in a manner that I believe a Utah bankruptcy would also address the issue (you’ll want to consult a bankruptcy attorney to be sure):


Interest on Chapter 13 debtor’s nondischargeable child support obligation continued to accrue postpetition, survived discharge of underlying child support debt, and could be collected personally from debtor post-discharge.

  1. Discussion

[3][4] We have held that post-petition interest on nondischargeable tax debts is also nondischargeable and may be recovered personally against a debtor who has received a discharge on the underlying debt in Chapter 11 and 12 bankruptcies. In re Artisan Woodworkers, 204 F.3d 888, 891-92 (9th Cir.2000) (applying Bruning v. United States, 376 U.S. 358, 360, 84 S.Ct. 906, 11 L.Ed.2d 772 (1964)). Foster argues that nondischargeable child support obligations in Chapter 13 bankruptcies should be treated differently from nondischargeable tax debts in Chapter 11 and 12 bankruptcies. Foster also argues the County’s failure to specifically request post-petition interest and object to his Chapter 13 plan constitutes a waiver of the County’s right to collect post-petition interest. We disagree.

By code, a claim for post-petition interest, e.g., post-petition interest on child support obligations, is not part of the bankruptcy estate because such “unmatured” interest was not part of the debt as of the date of the petition. 11 U.S.C. § 502(b)(2); Artisan Woodworkers, 204 F.3d at 891. Thus, a creditor cannot insist on including post-petition interest in a debtor’s Chapter 13 plan. See In re Pardee, 193 F.3d 1083, 1085 (9th Cir.1999) (“[A] creditor is generally not required to object to a plan that does not purport to pay post-petition interest because post-petition interest cannot be collected through the bankruptcy estate pursuant to 11 U.S.C. § 502(b)(2).”). The code does not specifically prohibit collection of post-petition interest after a debtor completes a confirmed Chapter 13 plan.

We agree with the weight of authority, including our own Bankruptcy Appellate Panel, that interest on nondischargeable child support obligations, like interest on nondischargeable tax debt, continues to accrue after a Chapter 13 petition is filed and is not dischargeable. In re Foross, 242 B.R. 692, 693 (B.A.P. 9th Cir.1999) (holding that interest accruing post-petition *498 on child support obligation in Chapter 13 plan is not dischargeable); see also In re Pitt, 240 B.R. 908, 911 (Bankr.N.D.Cal.1999) (holding that non-dischargeable support debts accrue post-petition interest and remain out-standing after discharge of the underlying debt); In re Messinger, 241 B.R. 697, 701 (Bankr.D.Idaho 1999) (same).

Several other jurisdictions have also concluded such obligations survive discharge of the underlying debt. In re Jacobson, 231 B.R. 763, 766 (Bankr.D.Ariz.1999) (holding that a Chapter 13 plan may not provide for payment of unmatured interest on support and maintenance arrearages, even though debtor will eventually be liable for such interest after all plan payments have been made); In re Slater, 188 B.R. 852, 856 (Bankr.E.D.Wash.1995) (confirming a Chapter 13 plan, though plan did not provide for payment of interest because interest on the nondischargeable child support debt continued to accrue against the debtor and could be recovered from him personally at conclusion of the Chapter 13 case); In re Crable, 174 B.R. 62, 63-64 (Bankr.W.D.Ky.1994) (holding that post-petition interest on nondischargeable child support arrearages continues to accrue during the pendency of Chapter 13 proceedings and survives discharge).

These decisions rely on the Supreme Court’s ruling in Bruning v. United States, 376 U.S. 358, 84 S.Ct. 906, 11 L.Ed.2d 772, which announced the policy reasons behind finding post-petition interest on a non-dischargeable debt also nondischargeable:

[O]ne would assume that Congress, in providing that a certain type of debt should survive bankruptcy proceedings as a personal liability of the debtor, intended personal liability to continue as to the interest on that debt as well as to its principal amount …. In most situations, interest is considered to be the cost of the use of the amounts owing a creditor and an incentive to prompt repayment and, thus, an integral part of a continuing debt…. [L]ogic and reason indicate that post-petition interest on a tax claim excepted from discharge … should be recoverable in a later action against the debtor personally, and there is no evidence of any congressional intent to the contrary.

Id. at 360, 84 S.Ct. 906.

We conclude that post-petition interest, as an integral part of the nondischargeable child support obligation, is also nondischargeable and may be collected personally against the debtor after the underlying debt is discharged. The district court’s grant of summary judgment in favor of the County is AFFIRMED.

Utah Family Law, LC | | 801-466-9277

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