The Army’s Dependent Support Requirement: A DSO Under Title 11?

By John R. Serrano1

Staff Sergeant (SSG) Snuffy serves on active duty in a stateside military installation. He is married and has one child. The U.S. Army provides him with an allowance for housing based on his zip code for paying rent on the house where he lives with his family. This allowance is known as the “basic allowance for housing” (BAH).

SSG Snuffy has started facing financial and marital difficulties, frustrations that were expressed to a friend who, in turn, directed him to visit the legal assistance office on his base. He disclosed to the legal assistance attorney his financial challenges and that his spouse had left the home with their child. The attorney explained that Army Regulation (AR) 608-99 establishes guidelines on financial support to dependents when there is a separation, and the consequences for not following it.

While SSG Snuffy is a fictional character, the true question is this: When providing legal assistance to soldiers and their dependents, what is AR 608-99? This regulation sets forth the Department of the Army’s policy, responsibilities and guidance on the financial support of a soldier’s family members.2 The client will usually disclose that they are going through a separation or are contemplating divorce. Physical separation of the spouses or dependents triggers this financial-support regulation, even though some states do not require physical separation of the spouses for legal separation purposes.3

Broadly speaking, once activated, in the absence of a financial support agreement or a court order containing financial support, the regulation imposes an obligation on the soldier to provide financial support in an amount equal to a rate dubbed the “BAH RC/T-WITH,” which is based on the soldier’s rank.4 This rate is based on a chart for reserve-component soldiers with dependents who are on active-duty orders of less than 30 days or are in transit from an area where no prior housing allowance exists. The amount on that chart differs from the housing allowance provided to servicemembers for their locality.5

The first month of separation further requires a soldier to pay to their spouse “enhanced interim financial support” (EIFS), which is equivalent to 25 percent of the monthly amount of the BAH RC/T-WITH rate.6 These support amounts can be financially crippling for some soldiers, who could be unaware of the regulation and have been accruing arrears since the day of physical separation.7

Claiming Support

Dependents may claim that they are not receiving financial support to the soldier’s commander, who will in turn address the matter with the soldier and provide a timely response to the claimant(s).8 If the soldier has not provided support, the commander will order the soldier to comply with the regulation.9 Falling into arrears is an automatic violation of the financial-support regulation and entails possible criminal penalties under Article 92 of the Uniform Code of Military Justice, which penalizes the failure to obey a lawful order or regulation.10

The commander cannot order payment of the arrears, and when opting for punitive action, it must be “based on failure to provide financial support when due, not for failure to pay arrears.”11 While the regulation does not provide a legal mechanism to collect arrears, it specifies that they might be enforced in court.12

AR 608-99 Arrears: A DSO Under the Bankruptcy Code?

Imagine SSG Snuffy files for bankruptcy, and his spouse presents a proof of claim to recover arrears based on the Army’s family financial-support regulation. At first glance, one might think that the claim would be a domestic-support obligation (DSO) with first-ranking priority under § 507 of the Bankruptcy Code.13 However, there is room for disputing this assertion.

A DSO is “a debt that accrues before, on, or after the date of the order for relief” in a bankruptcy case.14 This debt must be (1) owed to or recoverable by a spouse or child of the debtor, or a governmental unit; (2) in the nature of alimony, maintenance or support; (3) established or subject to establishment by a separation agreement, divorce decree, property settlement agreement, an order of a court of record, or a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and (4) that is not assigned to a nongovernmental entity.15 In the absence of a separation agreement, court order or administrative determination, SSG Snuffy may argue that the third prong has not been met, because AR 608-99 does not provide a legal mechanism for the Department of the Army to make a final determination as to the amount of debt accrued or its collection.16

Bankruptcy courts that have resolved whether a claim is a DSO look to whether the claim was determined. There are three noteworthy cases.

The requirement that a debt arise from “a determination” was at stake in In re Tinnel.17 The Tinnel bankruptcy court ruled that there was no evidence of a determination because the governmental agency could not show how it assessed its claim pursuant to state law, which required obtaining financial information from the debtor.18 In Hernandez v. Neb. HHS, the Bankruptcy Appellate Panel for the Eighth Circuit found that the administrative agency’s order that interpreted that the debt in question was in the nature of child support under nonbankruptcy law was sufficient to meet the requirement of a determination by a governmental unit.19 Finally, in Stevens v. Knestrick (In re Knestrick), the bankruptcy court observed that a letter from a child-support enforcement agency explaining that no child-support order would be issued because the parents had a private agreement that provided for college tuition was not an adoption of that agreement. Thus, the requirement of a determination by a governmental unit was not met.20

Case law discussing AR 608-99 is scarce, and there is no interpretative guidance as to whether the regulation itself or the commander’s order to the soldier is a determination by the governmental unit. Black’s Law Dictionary defines “determination” as “[a] final decision by a court or administrative agency.”21 The regulation does not contain any procedure that yields final decisions; the only determination that the soldier’s commander may make under the regulation is whether there is an obligation to financially support.22 Such determination is to be made if there is an inquiry into a financial nonsupport allegation.23 The regulation also contains provisions that complicate making a final determination of the arrears at the commander’s level, such as a reduction of the amount of support owed to a dependent for payments in kind, and the waiver of the requirement to provide support to the dependents.24

Furthermore, the regulation’s stated policy interest is to serve as an interim measure until support is resolved in court or settled by an agreement.25 This alone leads to the conclusion that the regulation by itself cannot be construed to be a determination by a governmental unit, because it does not give finality to the financial-support controversy. In essence, the regulation is framed in a manner that pushes the soldier and dependent to agree on financial support or resolve the issue in court as soon as possible.

Conclusion

After exiting his legal-assistance appointment, SSG Snuffy should be aware that he must comply with AR 608-99 because of his physical separation from his spouse and child. Noncompliance may entail administrative action from his commander or possible judicial punishment under the Uniform Code of Military Justice. If he were to file for bankruptcy to solve his financial challenges, he must understand that he can challenge a proof of claim by his dependents requesting nonsupport amounts under AR 608-99, because the Bankruptcy Code requires that the DSO be determined by a court order or governmental unit, and the Army does not determine the final amount of arrearages under its regulation. Ultimately, the bankruptcy judge in his case will rule on this unresolved point of law.

Should a court decide that arrearages do not qualify as DSOs under AR 608-99, SSG Snuffy’s dependents will have to collect those amounts as general unsecured claims, and the arrears also may be discharged. To avoid this outcome, dependents should seek a family court ruling that determines the amount of arrears accrued under AR 608-99. This is a fact-intensive inquiry, because the date of physical separation and the in-kind payments are key to determining the amount of debt. When the arrearage amount has been determined and awarded, the dependents should further ensure that the court, in its judgment, declares these arrears to be for a DSO. This will ensure that the debt is deemed in the nature of support and that it proceeds from an order of a court of record, thus safeguarding it as a first-priority claim in the eventuality of a bankruptcy filing.26

John Serrano is a trial counsel with the U.S. Army JAG Corps, stationed at Fort Knox, Ky., and currently forward deployed in Kuwait. He previously clerked for Chief Judge Mildred Cabán Flores of the U.S. Bankruptcy Court for the District of Puerto Rico.