State of Missouri Department of Social Services v. Spencer (In re Spencer)

Case Type:
Case Status:
16-3182, 16-3183 (8th Circuit, Aug 22,2017) Published
A discharge granted to Chapter 13 debtors does not enjoin the state from post-discharge collection of non-dischargeable domestic support obligation, even if a portion of such obligation was disallowed by the bankruptcy court.
Procedural context:
After disallowing a portion of the Missouri Department of Social Services claim for a domestic support obligation (DSO), the bankruptcy court ruled that the the MDSS's efforts to collect the DSO after the debtors received their Chapter 13 discharge violated the discharge injunction. On appeal, the 8th Circuit BAP reversed the bankruptcy court, holding that the discharge injunction does not apply to a nondischargeable DSO.
The debtors filed a Chapter 13 petition. The Missouri Department of Social Services (DSS) filed a proof of claim for the male debtor's domestic support obligations (DSO). The DSS subsequently amended its proof of claim, increasing the amount of the DSO, and the debtors objected. The bankruptcy court sustained the debtors' objection to the amended proof of claim. The DSS did not appeal. The DSS did not object to the debtors' Chapter 13 plan, which was confirmed by the bankruptcy court. The debtors finished payments under the plan and were granted a discharge. Six weeks later, the DSS garnished the male debtor's wages for the amount disallowed by the bankruptcy court. The debtors filed a motion for sanctions against the DSS, which the bankruptcy court allowed. The 8th Circuit noted that § 1328(c)(2) and § 523(a)(5) prevent the discharge a DSO debt, but refused to address the DSS's cross-appeal that asked the court to rule that the disallowed DSO claim survived the Chapter 13 discharge. In its opinion, the 8th Circuit indicated that it may not have Article III jurisdiction over that issue.
WOLLMAN and LOKEN, Circuit Judges, and NELSON (D. Minn,, sitting by designation)

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