In re Alewelt

520 B.R. 704, 2014 Bankr. LEXIS 4540, 2014 WL 5502474
CourtUnited States Bankruptcy Court, C.D. Illinois
DecidedOctober 30, 2014
DocketNo. 14-70578
StatusPublished
Cited by2 cases

This text of 520 B.R. 704 (In re Alewelt) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, C.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Alewelt, 520 B.R. 704, 2014 Bankr. LEXIS 4540, 2014 WL 5502474 (Ill. 2014).

Opinion

OPINION

MARY P. GORMAN, Chief Judge.

Before the Court is an Objection filed by Benita Alewelt (“Debtor”) to the claim of Wesley Hardin. The Debtor disputes the amount of the claim, as well as the priority status of the claim asserted by Mr. Hardin. For the reasons set forth below, Mr. Hardin’s claim will be allowed in the full amount of $55,577.86, with $12,624 entitled to priority status as a domestic support obligation and the balance of $42,953.86 allowed as a general unsecured claim.

I. Factual and Procedural Background

In January 2010, the Debtor and Mr. Hardin were divorced by a Judgment for Dissolution of Marriage entered in Sanga-mon County Circuit Court. Pursuant to the Judgment of Dissolution, Mr. Hardin was required to pay $700 per week in maintenance to the Debtor, subject to termination on the occurrence of certain events. The court also divided the parties’ marital property and awarded custody of their only minor child to Mr. Hardin. Later that year, a supplemental order was entered, revising the maintenance award to $500 per week, plus a percentage of Mr. Hardin’s overtime income. The Debtor was subsequently directed to pay $68 per week in child support to Mr. Hardin, which was to be deducted from the weekly maintenance payments Mr. Hardin was making to her.

On March 19, 2013, after conducting an evidentiary hearing on a petition to termi.nate maintenance filed by Mr. Hardin, the circuit court issued an Opinion retroactively terminating the maintenance award as of June 1, 2011. The court found that the Debtor was no longer entitled to maintenance based on her cohabitation with her boyfriend. The court concluded that, after giving credit for amounts to which she was otherwise entitled, the Debtor was required to reimburse Mr. Hardin for $28,581.15 in maintenance payments withheld from his wages between June 1, 2011,1 and the end of the work week of July 7, 2012, in addition to any amounts withheld thereafter. The March 2013 Opinion also modified the Debtor’s child support obligation. The court found' that a $17.33 monthly increase in child support was warranted as of September 2011, resulting in an arrearage owed to Mr. Hardin. Additionally, because the court retroactively terminated Mr. Hardin’s maintenance obligation, the child support payments previously deducted from the maintenance payments were left unpaid and remained due from June 2011. As a result, the court calculated a child support arrearage of $6384 through March 2013. On March 4, 2014, the circuit court entered a final “Default” Order2 against the Debtor, finding her in [707]*707arrears in child support payments in the amount of $12,624 through March 1, 2014, and calculating $42,953.86 as the total amount owed to Mr. Hardin for maintenance reimbursement.

On March 31, 2014, the Debtor filed for relief under Chapter 13. The Debtor scheduled the judgment in favor of Mr. Hardin in the amount of $55,577.86 as an unsecured debt. She did not identify the debt as contingent, unliquidated, or disputed. The Debtor also filed a Chapter 13 plan which made no provision for the payment of any priority debts, proposed no dividend for unsecured creditors, and provided only for the payment of her attorney’s fees.

Mr. Hardin filed a timely proof of claim asserting that the full amount of $55,577.86 was entitled to priority status as a domestic support obligation. Attached to the proof of claim was a copy of the March 2014 Order entered in the Sangamon County Circuit Court.

The Debtor filed an Objection to Mr. Hardin’s proof of claim challenging the amount of the claim as well as the priority status asserted by Mr. Hardin. The Debt- or first complains that no explanation is provided in the proof of claim for the difference in amounts set forth in the March 2013 Opinion and the March 2014 Order. Second, the Debtor argues that a debt owed for overpayment of maintenance is not a domestic support obligation and therefore is not entitled to priority treatment.

At the evidentiary hearing held on the Debtor’s Objection to Claim, both Mr. Hardin and the Debtor testified. Mr. Hardin testified that his average yearly income from 2011 to 2013 was $120,000. Mr. Hardin acknowledged that although he was awarded custody of the parties’ minor child, both that child and the parties’ other young adult son lived with their paternal grandparents beginning in September 2012. From that time, Mr. Hardin testified that he continued and still continues to support the children by paying $100 per month to their grandparents, providing health insurance for them, and paying for their extracurricular activities. Mr. Hardin acknowledged that he owed his attorneys approximately $16,000 as of June 1, 2011, and that he owed his attorneys about $49,000 by March 2013. He stated that he had to refinance his home in order to be able to afford the maintenance obligation to the Debtor. Mr. Hardin further testified that because the Debtor was awarded a significant portion of the parties’ personal property, he was forced to purchase new furniture, appliances, and other household items on credit. Mr. Hardin testified about medical expenses he incurred on behalf of the children and himself throughout 2012 and into April 2013. And although Mr. Hardin admitted that he maintained an average daily bank account balance ranging between $5000 and $10,000, he stated that his job was unstable and he needed to have money on hand in case of an emergency. Mr. Hardin also introduced into evidence an exhibit that had been presented at the final hearing in the circuit court which provided a precise, to-the-penny calculation of the amounts owed by the Debtor for both child support and maintenance reimbursement through the date of the final circuit court order. Pursuant to this Court’s pre-trial order, the exhibit had been provided to the Debtor and her attorney well in advance of the hearing.

The Debtor testified that she did not understand how the Sangamon County Circuit Court calculated the amounts owed as set forth in the March 2014 Order. She stated that she did not appear in the cir[708]*708cuit court for the final hearing on the matter and was not aware if she even received notice that a hearing was scheduled. She also stated that she never paid child support directly to Mr. Hardin. Rather, any amounts she owed for child support were deducted from the amounts paid to her by Mr. Hardin. But the Debt- or did not dispute that the March 2013 Order retroactively terminated the maintenance order as of June 1, 2011. And although the Debtor denied the accuracy of the circuit court’s findings, she did not dispute that she had received maintenance payments through March 2013.

At the close of the presentation of evidence, the Debtor’s attorney requested an opportunity to submit written briefs on the legal issues presented. In her brief, the Debtor conceded that the debt attributable to child support is a domestic support obligation entitled to priority treatment, but continued to argue that the debt for overpayment of maintenance is not entitled to priority status. Mr. Hardin filed a responsive brief, arguing that his claim for overpayment of maintenance is entitled to priority treatment. The matter was taken under advisement and is ready for decision.

II. Jurisdiction

This Court has jurisdiction over the issues presented here pursuant to 28 U.S.C. § 1334. This matter is a core proceeding under 28 U.S.C.

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Cite This Page — Counsel Stack

Bluebook (online)
520 B.R. 704, 2014 Bankr. LEXIS 4540, 2014 WL 5502474, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-alewelt-ilcb-2014.