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Section 507 Priorities (Judge Gargotta)

In re Kelly L. Knapper (June 13, 2012)
Issue: Does § 522(c)(1) of the Bankruptcy Code require that exempt property be turned over to a domestic support obligation claimant? Additionally, does § 507(a)(1) authorize the trustee to administer exempt property for the benefit of a domestic support obligation claimant?
Holding: Section 522(c)(1) does not make an otherwise exempt asset nonexempt for the payment of domestic support obligations. Although § 522(c)(1) mandates that exempt property remains liable for domestic support obligation debts, this does not mean that the statute requires that the property by turned over to the estate. Section 507(a)(1) does not authorize the trustee to administer exempt property for the benefit of a domestic support obligation claimant; it permits a domestic support obligation claimant to receive priority in distribution of the estate.