Mehlhaff v. Forest Allred, where the United States Bankruptcy Appellate Panel for the Eighth Circuit held that the debtor’s spousal maintenance award was actually property of her bankruptcy estate pursuant to 11 U.S.C. Section 541(a)(1). In this case, the debtor’s former husband was required to pay her spousal maintenance under a pre-petition divorce decree. However, the trustee of her bankruptcy estate sought to turn over this alimony award to her estate. Under the bankruptcy code, the trustee of the bankruptcy estate is able to take whatever interest the debtor spouse has in the spousal maintenance award. The debtor spouse argued that the purpose of the spousal maintenance award – often to provide a spouse with assistance in obtaining necessities of life until the spouse is able to do so independently – takes an award out of the prevue of section 541(a)(1). The debtor also claimed that future spousal maintenance awards should not be property of her bankruptcy estate for public policy reasons, claiming that spousal maintenance should be treated as a personal right rather than a property right. However, there was no pertinent case law to suggest that spousal maintenance was anything other than a property interest. Congress has provided a specific exemption for future alimony payments based on the presumption that such a right would be treated as an asset of the estate. The Court concluded that the issue in the underlying case is whether South Dakota law views a right to alimony as anything other than an interest of the debtor in property.  The debtor spouse did not show that the right to alimony payments was different from any other stream of payments someone might have been ordered to pay to her under South Dakota law.  The Bankruptcy Court confirmed that the future spousal maintenance payments were property of the bankruptcy state subject to any exemptions the debtor spouse may have. If you are interested in learning more about bankruptcy estates and how your spousal maintenance may be affected, consult with a Phoenix divorce attorney at Simon Law Group. With almost thirty years of experience, Simon Law Group has the knowledge and experience to interpret Arizona divorce laws, including Arizona divorce alimony laws, as they pertain to your individual situation. Our Phoenix divorce attorneys will fight aggressively to earn you the award you deserve. To schedule a free initial consultation with a Phoenix divorce attorney, call Simon Law Group at 480-745-2450 or contact us online to learn more about Arizona divorce laws in regards to your case.]]>