1. INTRODUCTION- CSED has moved for relief from stay to proceed against debtor for past due child support. The debtor opposed and argues that CSED and his former spouse, for whom CSED is collecting, are bound by the confirmed plan which they did not object to and will, in any event, be fully paid under the plan. I have determined that relief from stay should be granted.

2. FACTS- The debtor, Paul Thomas Moreno, filed a chapter 13 bankruptcy in Juneau. His amended chapter 13 plan was filed on April 25, 1995. It provides for payments of $233 per month for 60 months beginning December 1994, plus Alaska Permanent Fund Dividend checks and distribution from any native corporation in excess of $1,000 per year. The plan noted in a liquidation analysis, that the creditors could be expected to receive $11,726.

The plan lists the Internal Revenue Service as a priority creditor for $637. The plan also requested $1,000 for attorney fees.

Listed as an unsecured claim is the back child support owed to CSED on behalf of Konnie Leis, debtor's ex-spouse. Ms. Leis filed a letter objection indicating that Mr. Moreno owed her over $10,000 in child support. The child, at the time, was over 18 years of age. At the confirmation hearing, the court asked Brock Weidner, debtor's counsel, if he was aware of Ms. Leis' objection. He said he was not. Other than Ms. Leis' letter, no formal objections were filed.

At the confirmation hearing, the court observed that it would normally deem itself bound by In re Pacana, 125 BR 19 (9^th Cir BAP 1991), but thought that the case had been superceded by the Bankruptcy Reform Act of 1994, which added some provisions making certain that spousal support obligations were priority claims.

5 ABR 7      The plan was confirmed by an order filed on June 15, 1995 (Docket Entry 15). Copies of the confirmation order were sent to both Konnie Leis and CSED. The only creditor who filed a proof of claim was the IRS, which filed Proof of Claim No. 1 for $640.26, $602.27 of which was a priority claim.

In the confirmation order, the court indicated that to the extent any portion of Konnie Leis' claim remained unpaid, it would be deemed not to be discharged by any order discharging debtor in chapter 13. The court also agreed that, for administrative convenience, the trustee could pay the IRS before Konnie Leis since the amount was nominal.

Almost a year later, CSED filed a motion for relief from stay. The debtor countered that the plan was confirmed, res judicata, and had been negotiated with Elizabeth Vasquez of the State Attorney General's Office. No written stipulations were filed with respect to the claim, however.

3. ANALYSIS- In a discussion with debtor's counsel at the confirmation hearing, the court incorrectly recalled the gist of In re Pacana, 125 BR 19 (9^th Cir BAP 1991). In that case, the debtor had purported to treat the spousal support debt as priority. The BAP noted 5 ABR 8      that there was no priority at that time for spousal support. In the Bankruptcy Reform Act of 1994, a priority was granted to certain spousal support obligations under what is now 11 USC § 507(a)(7), which provides:

(a) The following expenses and claims have priority in the following order: . . .

(7) Seventh, allowed claims for debts to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that such debt--

(A) is assigned to another entity, voluntarily, by operation of law, or otherwise; or

(B) includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support.

At the time of the confirmation hearing, I indicated that the gravamen of the Pacana holding concerned whether it was appropriate to grant priority classification to spousal support in light of the fact that there was no statutory authority at that time to do so. This was too narrow a reading of Pacana.

Pacana is more correctly read to provide that spousal support payments are not includable in a chapter 13 plan.

Pacana was a two-to-one decision, and the majority noted that its rationale was not agreed to by many other courts. A majority of the court concluded:

Thus, Congress by virtue of § 362(b)(2) specifically excepted child support obligations from the effect of the bankruptcy stay while the case is pending, and through §§ 1328(a)(2) and 523(a)(5), it specifically excepted child support obligations from the effect of confirmation in the Chapter 13 bankruptcy case. These provisions, read together, are consistent and manifest a legislative intent that child support obligations be excepted from the broad reach of §§ 1322 and 1327, and therefore from the effects of a Chapter 13 plan, as well as the post-confirmation automatic stay. [Pacana at 22]

and,

We recognize that various cases cited above are reacting constructively to the economic problem of a debtor who, unable to meet support or alimony obligations, turns to Chapter 13. However, the Code's treatment of child support obligations manifests Congressional intent that while a Chapter 13 plan may alter or delay the enforcement of ordinary unsecured creditors' claims, child support claimants need not wait in line with such creditors, but rather may proceed against the debtor without the hindrance of either automatic stay or discharge. [Pacana at 25]

One of the rationales of the majority was that the property of the estate normally revested in the debtor in a chapter 13 case. 11 USC § 1327. It determined that the revesting of the estate, along with the exception to the automatic stay created by § 362(b)(2) (providing there is not automatic stay to prevent the collection of support payments for property which does not belong to the bankruptcy estate), justified a conclusion that the automatic stay does not exist. This argument does not acknowledge, however, that it is far from clear what is property of the estate after a chapter 13 confirmation, but before a discharge is entered. Section 1306(a) provides:

(a) Property of the estate includes, in addition to the property specified in section 541 of this title--

(1) all property of the kind specified in such 5 ABR 9      section that the debtor acquires after the commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 11, or 12 of this title whichever occurs first; and

(2) earnings from services performed by the debtor after the commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 11, or 12 of this title, whichever occurs first.

Courts are split over the interpretation of this provision, especially vis-a-vis § 1327(b) which provides for revesting on confirmation unless the plan provides otherwise. Compare, e.g., In re Petruccelli, 113 BR 5, 15-17 (Bankr SD Cal 1990) (holding that there is no automatic stay in effect post-confirmation and pre-discharge to prevent an attempted recovery for a post-confirmation debt from a post-confirmation bank account, because the property was vested in the debtor, not the estate) with In re Aneiro, 72 BR 424, 428-30 (Bankr SD Cal 1987) (recognizing the continuance of a bankruptcy estate after confirmation and before discharge, even without a reservation in the plan or order of confirmation) and Security Bank of Marshaltown, Iowa v Neiman, 1 F3d 687 (8^th Cir 1993). Pacana does not address the possibility that post-confirmation salary may, to some degree, be property of the estate, subject to the automatic stay.

Some of the courts which have disapproved of Pacana, are In re Gonzales, 172 BR 320, 326-28 (ED Wash 1994); In re Lackey, 148 BR 626 (Bankr ND Ala 1992); and In re Walter, 153 BR 38 (Bankr ND Ohio 1993).

Others would support the Pacana reasoning. E.g., Caswell v Lang, 757 F2d 608, 610 (4^th Cir 1985).

Certain courts would allow discriminatory treatment to allow the child support to be paid in full while other unsecured debt is not. E.g., In re Leser, 939 F2d 669, 672 (8^th Cir 1991), and In re Gonzales, supra.

Yet others would permit inclusion of child support in a chapter 13 plan only upon the express approval of the party entitled to the support. See, In re Davidson, 72 BR 384, 387 (Bankr D Colo 1987).

On reflection, I recognize I misinterpreted Pacana when I confirmed the plan, and will now follow it by lifting the stay. While there is some controversy in this circuit as to the binding authority of a BAP 5 ABR 10      opinion, I would normally give great respect to such an opinion, and will follow it in this case. Compare, In re Standard Brands Paint Company, 154 BR 563, 568, fn 3 (Bankr CD Cal 1993).

DATED: June 30, 1997

HERBERT A. ROSS
U.S. Bankruptcy Judge