Wednesday, February 24, 2010

If my ex-spouse files for Bankruptcy, can they discharge support they owe?

We recently posted this answer on our Bankruptcy Blog and thought that it could be useful to our family law audience as well.

Under the current Bankruptcy Code, a debtor who files a Chapter 7 bankruptcy will not receive a discharge from debts defined in paragraph 5 of 11 U.S.C. § 523(a) as "domestic support obligations" or debts under 11 U.S.C. § 523(a)(15) owed "to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit."

"Domestic support obligations" are defined by 11 U.S.C. § 101(14A) as debts "in the nature of alimony, maintenance, or support" owed to a spouse, former spouse, or child.

These limitations on dischargability therefore apply to both child support and alimony, as well as other potential obligations under a divorce decree, such as agreements to pay joint debts or obligation to pay an ex-spouses attorney fees.

If your ex-spouse does file for bankruptcy, you may need to file responsive pleadings and argue this issue in front of a Judge if the debtor seeks to discharge the debt. If you fail to dispute the discharge, that could result in the debt being discharged. Though this is very unlikely, if you are not sure how to protect your rights you should consult with an attorney.

Monday, February 22, 2010

Mass Attorney General asking Federal Judge to declare DOMA unconstitutional.

According to a Boston Globe article, Massachusetts Attorney General Martha Coakley filed a request with the U.S. District Court last Thursday, February 19, 2010, to rule on the constitutionality of the Federal Defense of Marriage Act (DOMA). The reasoning behind the A.G.'s request is that DOMA forces Massachusetts to discriminate against same-sex spouses in order to maintain certain federal funding for programs like Medicaid and Veteran's burials.

These are only two examples of how DOMA affects same-sex spouses. Despite Massachusetts law granting same-sex couples the right to marry, there are Federal benefits that traditional spouses enjoy which same-sex couples do not because of DOMA. Many of these differences are related to tax benefits for spouses. For example, spouses can transfer property between each other without certain tax consequences where non-spouses cannot.

This can be a particularly difficult issue in same-sex divorces as it relates to retirement accounts. Because retirement accounts are defined by Massachusetts law as martial property, divorces often result in a non-taxable transfer of retirement funds between ex-spouses. When the division is completed by a Qualified Domestic Relations Order (QDRO) the transfer does not result in any tax consequences. But transfers between non-spouses of retirement funds are treated like a liquidation resulting in income tax and a tax penalty (if the plan participant is below retirement age). Since same-sex spouses are not spouses for federal purposes retirement account funds cannot be transferred without tax consequences.

Although you are unlikely to hear a lot of discussion relating to same-sex divorce in support of the same-sex marriage debate, the discrimination against same-sex spouses becomes even more evident when these spouses request the protection of divorce laws.

Even if you believe that states should have a right to decide the same-sex marriage issue state-by-state, it's hard to support discrimination by the Federal government of same-sex couples in the states that have already decided in favor of same-sex marriage. DOMA effectively throws the weight of the Federal government against same-sex marriage rather than remaining neutral on the issue. Good luck to the Mass A.G. in restoring at least some balance.

Saturday, February 13, 2010

It's a Trap!: The Massachusetts Alimony Debate

UPDATE: There is pending legislation for major changes to the alimony statute in Massachusetts. The Alimony Reform Act of 2011 was filed on January 18, 2011 and you can learn more about the Act at MassAlimonyFormula.com or in our recent blog post highlighting the differences between the bill and the current law.

Because of my involvement in the creation of the Divorce Spousal Support Calculator I am often asked if I think alimony in Massachusetts is fair.

Of course, this is a loaded question, and so my typical answer is that nothing in the law is "fair", it is simply our best efforts to be "fair and equitable." In creating the Calculator, however, I have already expressed a desire for greater consistency. This in itself is an admission that I would like to see improvement in the current statute.

Many others have expressed there displeasure with the current statute as well. As a result there is an ongoing (and at times heated) debate in Massachusetts right now over how to amend the statute. But how this debate is now framed is a trap. There is no right answer because the choices are both inadequate.

The Boston Business Journal (Dueling Alimony Bills Raise Hackles in Legal Circles), NECN, WBZ, the MetroWest Daily News, and even The Wall Street Journal have all covered the debate with varying degrees of impartiality. Many of these stories concentrate on two bills that have been presented in the Massachusetts Legislature. The House Bill No. 1785 would add numerous changes to the current statute, including limitations on duration, sunset provisions reducing alimony after five years, limitations on increases in alimony to specific circumstances, termination of alimony upon retirement of the payor or cohabitation of the recipient, and limitations on the courts' ability to consider cohabitation of the payor. The Senate Bill No. 1616 would add only the words "and duration" to the language specifying the powers of the courts to determine alimony.

The current statute, MGL Chapter 208 Section 34, gives Judges broad discretion in awarding alimony. Although it is my experience that most Judges are fair in their rulings, the lack of firm direction in the statute forces many cases to trial that might otherwise have been settled. Much of the criticism of the Senate Bill centers around this issue of protracted and expensive litigation. Indeed, the proponent of the Senate Bill, Newton Senator, Cynthia Creem, has been attacked as having a conflict of interest because she practices family law, and could potentially benefit from increased litigation costs.

Unfortunately, this is the type of debate you receive when only two solutions are presented to a very complicated and diverse set of problems. There are multiple criticisms of the current statute. They include the fact that the statute doesn't limit the duration of alimony, encourages litigation of the issue of alimony by its vagueness, and that it fails to address numerous scenarios in which unfair results may occur (such as forcing a payor to continue support after retirement age or when the recipient is cohabitating).

The Senate Bill admittedly only addresses one of these issues, the issue of duration. But to say that it further encourages litigation is a mistake. The current state of the law in Massachusetts is that Judges to do not have the authority to limit the duration of alimony in a Judgment. This forces further litigation because a Modification action is necessary to end alimony in cases where temporary alimony was appropriate or retirement has changed the circumstances. Adding the duration language suggested in the Senate bill could avoid future litigation, by allowing Judge's to address this issue in the original order.

In contrast, the House Bill attempts to address many of these issues at once, but takes a very specific position with respect to each issue. Since many of the proponents of this bill are alimony payors themselves (such as those quoted in another BBJ article) their conflict of interest is obvious (as opposed to the supposed conflict of interest of Senator Creem).

There are multiple ways other than the changes described by House Bill No. 1785 that we could improve the law in Massachusetts without moving it too far in favor of the potential payors. For instance, Maine has a statute that defines different types of alimony, allowing a Judge to order transitional or reimbursement support in cases where long-term support may not be appropriate.

Similarly, the House Bill's failure to address the creation of a formula (or at least a maximum), as recommended by the AAML, will leave us with the same problems of ongoing litigation. The House Bill might solve the problems of some of its proponents, but it is not going to reduce the litigation of most alimony cases which will still require the input of a Judge to decide the ultimate amount of spousal support payments.

This is why it's a trap to ask any experienced practitioner to choose between Option A (the House Bill) and Option B (the Senate Bill).

Whether or not changes to the statute favor the recipient or the payor, true reform of the alimony statute should provide consistency. Therefore, the most fair way to amend the statute would be to include both a durational component and a formula for calculating the appropriate amount of alimony, while still allowing Judges to vary from the presumption if they make findings that a specific factor (as suggested by the AAML) warrants such a deviation. This is the only way to reduce litigation and provide consistency.

While everyone may not consider a formula "fair", it will at least have the advantage of treating everyone the same, and the first step towards fairness is consistency.

For more information about the various formulas in use in other states (and by some Massachusetts Judges) view the Divorce Spousal Support Calculator or our accompanying Article.

Divorce Spousal Support Calculator: An Alimony Formula Resource

UPDATE: There is pending legislation for major changes to the alimony statute in Massachusetts. The Alimony Reform Act of 2011 was filed on January 18, 2011 and you can learn more about the Act at MassAlimonyFormula.com or in our recent blog post highlighting the differences between the bill and the current law.

The Stevenson-Kelsey Spousal Support Calculator has been renamed. It will now be known as the Divorce Spousal Support Calculator: An Alimony Formula Resource.

We are hoping that this name change will reflect our intention that the calculator be used by everyone to evaluate the reasonableness of alimony proposals in divorce cases. In keeping with that goal, we have also updated the latest calculator worksheet and article to include statutes from both Texas and Maine relating to alimony.

In addition, the article contains reference to the latest debate in Massachusetts surrounding a House and Senate bill both proposing changes to the current Massachusetts statute relating to alimony. Thank you to everyone who has provided us with support in keeping this calculator updated with the latest developments in alimony.

Monday, February 8, 2010

What is LAR and why you should care!

Limited Assistance Represetation (also called "unbundling" or "LAR") is a program that allows a lawyer to provide partial services to a client, limiting the attorney's representation to only a specific matter while the client mangages the remainder of the case. On May 1, 2009, the Supreme Judicial Court issued a press release that LAR is now permitted in all trial court departments in Massachusetts.

In Famly Law, this often means that the lawyer either assists in the preparation of court pleadings, but doesn't go to court, or agrees to only go to court for specific events. Limiting services in this way allows for greater predictability in the amount of time an attorney might spend working on your case. This predictability allows us to provide a flat fee for many family law related services.

The LAR program is an exception to the normal rules, in which attorneys file unlimited appearances and "ghostwriting" is frowned upon. Under the LAR program, "ghostwriting" (writing pleadings on behalf of a client who will present them without counsel) and limited appearances are permitted by the Supreme Judicial Court to give more parties the opportunity to have legal advice even if they cannot afford an attorney for their whole case.

The program requires that attorneys participate in a training for LAR in order to be eligible to provide these limited services. Attorney Kelsey participated in the required LAR training at the Norfolk Probate & Family Court, when LAR was only a pilot program, before it was expanded in May 2009, and is therefore certified to practice LAR. Contact us for a one hour initial consultation to learn more about LAR and the flat fee services that we offer.

Monday, February 1, 2010

What is a Complaint for Modification?

A Complaint for Modification is the action by which you can request that the Court make a change to past Court Judgments. If the Orders that you want changed are only Temporary Orders then you must request a change by Motion.

A Complaint for Modification is the beginning of a new action and should only be used to change permanent orders which are called Judgments. To succeed on a Complaint for Modification you must prove two things: first you must prove that there has been a "significant material change in circumstances;" and second you must prove that the change in circumstances warrants a change in the Court's Order.

A "significant material change in circumstances" is a change in your life that is big enough to have an effect on the factors that related to the original Order of the Court. For example, if the Order that you want to change is a Child Support Order, then you must demonstrate that there has been a change to the factors that affect a Child Support determination, such as the income of the parties, expenses of the parties or needs of the children. In addition, you must demonstrate that that change is significant. In Child Support cases a good rule of thumb for determining significance is whether or not the change in circumstances would result in a 20% change in the Child Support Order.
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