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Spousal support, alimony not dischargable in bankruptcy

The Chapter 13 debtor could not discharge the creditor-ex-wife's $12,500 claim for payment of a second mortgage and a judgment lien on the former marital home, because this debt was "in the nature of alimony, maintenance, or support." The debtor argued this claim was not a domestic support obligation but was instead "for a second mortgage debt and judgment lien on property that were satisfied when the real estate was sold by creditor previously . . . ." Chapter 13 "distinguishes between domestic support obligations, which are non-dischargeable, and other . . . 'post-marital obligations,' including property settlements, which are dischargeable." Domestic support obligations, "as a priority debt, must be paid in full during the chapter 13 plan." The bankruptcy court analyzed the claim at issue using the Calhoun factors, considered the two consent decrees from the parties' divorces and a later trial court order in the second divorce, and "determined that it was the intent of the state court and the parties to create a support obligation." The fact "the mortgage payments helped provide a residence for the children is a strong indication that the payments were intended as support rather than a property settlement." The court concluded that the "state court intended Creditor to keep the family home as a residence and shelter for the children or to have the proceeds of the sale of the home as support." Further, the bankruptcy court correctly held that "the $5,000 debt that arose from Creditor paying off a judgment lien against the home was a domestic support obligation." The judicial lien filed against the home reduced the amount of support that the children received when the home was sold. At the time of the 2009 order, the home had already been sold. The court reasoned that if the state court's "intention had been for the proceeds of the sale to be a property settlement, the state court could have made that clarification. Because the payment of the second mortgage is tied to support issues in all three judgments, and the judgment lien debt reduced the amount of support received and is provided for as part of a support order, the bankruptcy court's finding that the state court intended both these debts be treated as support obligations is not clearly erroneous." Affirmed.

FAMILY LAW 88: The trial court found that the children did not have an established custodial environment with defendant because, before the separation, he did not have a large role in the children’s lives.

The trial court credited plaintiff’s testimony that, before the parties’ separation, defendant spent minimal time helping to care for the children, so its finding that the children would not have looked to defendant for guidance, discipline, the necessities of life, and parental comfort during that time was not against the great weight of the evidence.

REAL ESTATE 89: RM had not included any language in the deed providing that the property was a joint tenancy with full rights of survivorship, the property instead became a tenancy in common.

RM drafted the deed without seeking counsel and mistakenly believed that, if either she or FK died, the property would fully pass to the surviving tenant. FK’s will provided that if his wife predeceased him—which she did—the personal representative of his estate should sell any residual property that he owned and divide the cash proceeds equally among his surviving children.

FAMILY LAW 83: A trial court can terminate a parent’s rights and permit a stepparent to adopt a child.

A trial court has discretion to terminate a parent’s rights and permit a stepparent to adopt a child when the conditions of MCL 710.51(6) are met. MCL 710.51(6)(b) requires the petitioner to establish that the other parent had the ability to visit, contact, or communicate with the children, and substantially failed or neglected to do so for a period of two years.

PROBATE 53: The trust agreement included an Incontestability Provision.

A settlor’s intent is to be carried out as nearly as possible. Generally, in terrorem clauses are valid and enforceable. However, a provision in a trust that purports to penalize an interested person for contesting the trust or instituting another proceeding relating to the trust shall not be given effect if probable cause exists for instituting a proceeding contesting the trust or another proceeding relating to the trust.

FAMILY LAW 82: Court stated it would terminate the personal protection order (PPO) after the parties present documentation of the initiation of the divorce proceedings.

However, the trial court concluded that these matters should, in fact, be in the province and the jurisdiction of the Family Division and in that respect, having issued a personal protection order, the Court stated it would terminate the personal protection order after the parties present documentation of the initiation of the divorce proceedings.

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