Document Type
Research Memorandum
Publication Date
2023
Abstract
(Excerpt)
A debt which arises prior to the filing of the petition for discharge in bankruptcy is dischargeable unless it can be categorized as one of the statutory exceptions to discharge listed in section 523(a) of title 11 of the United States Code (the “Bankruptcy Code”). Section 523(a)(5) of the Bankruptcy Code prohibits the discharge of awards of domestic support due to a debtor’s spouse, former spouse, or child. Accordingly, maintenance, alimony, and child support, often awarded in divorce proceedings, fall under the federal bankruptcy law statutory exceptions to discharge for domestic support obligations.
When an unmarried couple separates and individuals are unable to obtain relief through the traditional channel of divorce law, awards for domestic contributions, as determined in arbitration proceedings, are not protected by the statutory exceptions to discharge afforded to previously married individuals. Federal bankruptcy law governs the dischargeability of debts in bankruptcy proceedings and bankruptcy courts must examine the language of the award to determine whether an award is dischargeable in bankruptcy proceedings. If an award calls for the transfer of property, the award is a property interest which is not dischargeable in bankruptcy. However, if the award requires the payment of a specific sum of money, the award is a money judgement which is dischargeable in bankruptcy.
This article explores when a court may classify an award for domestic contributions as a money judgement which is dischargeable in bankruptcy, or as a property interest which is not dischargeable in bankruptcy. Part I analyzes the legal standard for classification of the language of an arbitration award as granting either a money judgement or a property interest. Part II focuses on dischargeability of debts in bankruptcy proceedings, including governing federal bankruptcy law, the authority of arbitrators, and the jurisdiction of bankruptcy courts and state courts to determine the dischargeability of debts.