Bankruptcy Law
Court Case: Rivera v. Orange County Probation Department
Topic: Bankruptcy Law
Date: March 10, 2017
Link: https://harvardlawreview.org/2017/03/rivera-v-orange-county-probation-department/
Case Summary:
Bankruptcy is often looked at as a “fresh start”, however, it can actually be something much more complicated than it seems. Domestic support obligations (DSO’s), or debts that come in the form of alimony, maintenance, or support, cannot be discharged and forgiven in bankruptcy under the U.S. Bankruptcy Code. A DSO exists so that it can protect familial dependents from financial abandonment.
In Rivera v. Orange County Probation Department, the Ninth Circuit held that a debt owed by a mother to a county probation facility for her son’s detention is not a DSO, and that this debt was therefore dischargeable in bankruptcy. Maria Rivera’s son was incarcerated for 593 days by the Orange County Probation Department. Under California statute, counties in the state are authorized to charge the parents of a detained minor for the costs incurred during the incarceration. The amount that was billed to Rivera was a tremendous $16,372. After selling her house and paying off $9508 of the debt, she failed to appear at a hearing intended to gauge her ability to pay. As a result, the court entered a judgment against her for $9,905.
Several months later, Rivera filed for bankruptcy and was granted a full discharge. Having no assets to her name, Rivera found herself in the same situation. The county claimed that Rivera’s debt was a DSO and thus was excluded from the full discharge. The court ruled in favor of Rivera, stating that these types of billing practices create a disadvantage for Rivera and her son.
This specific court case is related to our curriculum in chapter 13, because it involves bankruptcy. Our notes define bankruptcy as a proceeding in bankruptcy attempts to allocate the debtor’s assets to the creditors in a fair and equitable fashion. Once the assets are allocated, the debtor receives a discharge in bankruptcy. In addition to this, a discharge in bankruptcy prevents creditors from enforcing most of the debtor’s contracts. This court case gives us a scenario where a discharge in bankruptcy isn’t always a total forgiveness, as there can be many implications involved with a bankruptcy situation.
In summation, I leave you all with several questions to evaluate. Do you agree or disagree with the court’s ruling which was in favor of Rivera? Do you believe that local and federal governments take advantage of debtors by classifying debt as a DSO? What kinds of debt should be forgiven? What kinds of debt shouldn’t be forgiven when filing for bankruptcy?
