Walden v. Florida, Department of Health & Rehabilitative Services (In Re Walden)

60 B.R. 641, 1986 Bankr. LEXIS 6105
CourtUnited States Bankruptcy Court, M.D. Florida
DecidedMay 7, 1986
DocketBankruptcy No. 84-279-BK-J-7, Adv. No. 85-38
StatusPublished
Cited by3 cases

This text of 60 B.R. 641 (Walden v. Florida, Department of Health & Rehabilitative Services (In Re Walden)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Walden v. Florida, Department of Health & Rehabilitative Services (In Re Walden), 60 B.R. 641, 1986 Bankr. LEXIS 6105 (Fla. 1986).

Opinion

MEMORANDUM DECISION

GEORGE L. PROCTOR, Bankruptcy Judge.

This adversary proceeding was commenced by debtor, Ronald Eugene Walden, pursuant to 11 U.S.C. § 523(a)(5) to determine the dischargeability of a state court judgment in favor of State of Florida Department of Health and Rehabilitative Services.

Debtor and his former wife, Ann Walden, had two children, Charles and Chip Walden, as issue of their relationship. During October, 1975, Ann Walden applied for and received public assistance from the State of Florida pursuant to Title IV-A of the Social Security Act and F.S.A. § 409.235 et seq. On April 21, 1976, Ann Walden assigned her rights for child support to the State of Florida in an instrument entitled “Acknowledgment of Assignment of Rights to Support.” 1 Debtor and Ann Walden were divorced on May 17, 1976. Jurisdiction over the defendant/husband, in the action for dissolution of marriage was based upon notice by publication rather than personal service of process. The divorce judgment did not therefore provide for child support. Ann Walden received public assistance through November, 1982.

The State of Florida Department of Health and Rehabilitative Services instituted suit against debtor as the responsible absent parent in state court for reimbursement of the public assistance advanced for the children. After trial on August 2, 1983, final judgment was entered for the State in the amount of $12,118.00. Paragraph 2 of the Final Judgment stated that *643 debtor stipulated at trial to repay the debt in the amount of $150.00 per month.

Debtor filed his voluntary petition under 11 U.S.C. Chapter 7 on April 17, 1984, and obtained a discharge on August 6, 1984.

Generally, most properly scheduled debts are dischargeable. Child support obligations are excepted as a matter of public policy and found nondischargeable if made “in connection with a separation agreement, divorce decree, or other order of a court of record or property settlement agreement.” 11 U.S.C. § 523(a)(5). If a support debt is assigned to another entity the debt is nondischargeable but only if the assignment is made pursuant to § 402(a)(26) of the Social Security Act, 42 U.S.C. § 602(a)(26).

A companion federal statute, § 456(b) of the Social Security Act, 42 U.S.C. § 656(b), likewise excepts from discharge in bankruptcy child support obligations assigned to a state pursuant to § 402(a)(26) of the Social Security Act, 42 U.S.C. § 602(a)(26). Although § 456(b) was repealed by The Bankruptcy Reform Act of 1978, this provision was reenacted in almost identical form in 1981 at the same time 11 U.S.C. § 523(a)(5) was amended to find nondis-chargeable child support obligations assigned to a state pursuant to § 402(a)(26) of the Social Security Act, 42 U.S.C. § 602(a)(26). Pub.L. 97-35, § 2334(b), 95 Stat. 863(1981).

Section 523(a)(5)(A) of the Bankruptcy Code and § 456(b) of the Social Security Act are virtually identical in that each excepts from discharge in bankruptcy a debt arising from money assistance paid by a state pursuant to Title IV-A and Title IV-E of the Social Security Act and assigned to the state pursuant to 42 U.S.C. § 602(a)(26). The only difference between the two statutes is that under a literal interpretation of 11 U.S.C. § 523(a)(5)(A) the underlying debt must arise “in connection with a separation agreement, divorce decree, or other order of a court of record or property settlement agreement.” 11 U.S.C. § 523(a). See In re Leach, 15 B.R. 1005 (Bkrtcy, D.Conn.1981).

According to Senate Report 97-139, the purpose of the 1981 revisions was to

... reverse the effect of an amendment made by section 328 of P.L. 95-598 and reinstate a provision of the Social Security Act previously in effect, declaring that a child support obligation assigned to a State as a condition of AFDC eligibility is not discharged in bankruptcy. The Committee believes that a parent’s obligation to support his child is not one that should be allowed to be discharged by filing for bankruptcy, and that a child support obligation assigned to a State as a condition of AFDC eligibility should not be subject to termination in that way.

S.Rep. No. 139, 97th Cong., 1st Sess. 523 (1981), 1981 U.S.Code Cong. & Ad.News § 764 at 789-90.

This Court finds that a literal interpretation of 11 U.S.C. § 523(a)(5)(A) nullifies the express goal of Congress in amending § 523 and readopting 42 U.S.C. § 656(b). Therefore, the Court declines to follow In re Leach, supra, but instead adopts the analysis of In re Mojica, 30 B.R. 925 (Bkrtcy, E.D.N.Y. 1983). See also In re Richards, 33 B.R. 56 (Bkrtcy, D.Or. 1983), rev’d, State of Oregon v. Richards, 45 B.R. 811 (D.Or.1984).

The Mojica Court analyzed the legislative history of § 523(a)(5) and determined that Congress intended to except from discharge all legitimate debts for alimony or support, not just those that arose in a manner expressly enumerated in the statute. Mojica, supra, at 928. In conclusion, the Court held that “... Section 523(a)(5) was not properly drafted and should be interpreted to reflect the true spirit and intent of the law and not simply be given a literal interpretation.” 2 Id. at 932.

*644 Having determined that 11 U.S.C. § 523(a)(5)(A) and 42 U.S.C. § 656(b) should be interpreted identically, the Court turns to the issue of whether the subject $12,-118.00 is a debt assigned pursuant to § 402(a)(26) of the Social Security Act, 42 U.S.C. § 602(a)(26).

The Aid to Families with Dependent Children program (AFDC) is a federal program financed on a matching fund basis and administered by the states. 79 Am.Jur.2d, Welfare Laws, § 6 (1975). See also 42 U.S.C.

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60 B.R. 641, 1986 Bankr. LEXIS 6105, Counsel Stack Legal Research, https://law.counselstack.com/opinion/walden-v-florida-department-of-health-rehabilitative-services-in-re-flmb-1986.