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In re Phegley | 443 B.R. 154 (2011)
In a Chapter Thirteen bankruptcy, the debtor commits to a plan to repay all or part of the debtor’s debts in installments over a three-to-five-year period. At the end of that period, if the debtor has made all payments required under the plan, then the debtor receives a discharge that releases the debtor from liability for the remaining balance of most debts. But certain debts are non-dischargeable. In In re Phegley, we explore one type of non-dischargeable debt, namely domestic-support obligations.
When John and Sheri Phegley divorced, a Missouri court entered a divorce decree that required John to pay Sheri twelve hundred and fifty dollars a month in spousal maintenance for forty-eight months, or until Sheri remarried or either party died, if earlier. The decree stated that Sheri was unable to support herself at the time of divorce and that the maintenance would facilitate her acquisition of a teaching certificate necessary to become financially self-sufficient. The decree also required John to pay a portion of Sheri’s attorney fees.
Just a few months after the divorce, John filed for Chapter Thirteen bankruptcy. Sheri filed a complaint in the bankruptcy proceeding to determine the dischargeability of John’s maintenance and attorney-fee obligations. She argued that both were non-dischargeable domestic-support obligations. But John argued that the divorce decree only awarded Sheri maintenance to offset an award of certain other marital assets to John, meaning the maintenance was a dischargeable property settlement.
The bankruptcy court held that the maintenance and attorney-fee payments were non-dischargeable domestic-support obligations. John appealed to the Bankruptcy Appellate Panel for the Eighth Circuit.
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