IN RE MARLOW, (N.D.Cal. 1978)

BROWN, Bankruptcy Judge

While Section 17a(7) of the Bankruptcy Act exempts from discharge debts for child support, where a bankrupt owes a county monies that the county has paid out for his child support obligation, the debt may be ordered discharged under Section 2a(15) of the Bankruptcy Act where the county repeatedly fails to act in a timely fashion with regard to bankruptcy proceedings.

Bankrupt filed for bankruptcy on April 23, 1976 listing an indebtedness to a county for child support it had paid. The date set for filing claims was August 20, 1976. The county filed its claims on June 10, 1976 and May 5, 1978 but failed to authenticate the claims. At these times there were sufficient funds in the bankrupt's estate to pay or partially pay such claims had they been properly filed or authenticated. The trustee of the estate objected to the county's claims on July 26, 1978 and notice of objection was sent to the county which took no action. The bankrupt procured an extension of time on behalf of the county in which to file an answer to trustee's objections on July 6, 1978. The county called the court on July 11, 1978 and was granted a further extension of time to file an answer until July 17, 1978. On July 19, 1978 the county filed its answer — two days past the deadline. Default was entered and it was determined that these claims could not be paid from the monies in the hands of the trustee for this estate. At a duly noticed hearing on October 12, 1978, the county defaulted again.

The county is claiming a right to this money pursuant to Section 17a(7) of the Bankruptcy Act which exempts child support from discharge. The court found that while Section 17a(7) makes certain support obligations nondischargeable, these are primarily in relation to the supporting parents or guardians and not governmental agencies. As a result of the complete inefficiency of the county, despite the aid of the bankrupt and the Bankruptcy Court, equitable principles of estoppel and laches were invoked by this court to discharge the entire debt. Section 2a(15) indicates that the court may make any orders necessary to effect the purposes of this Act. The court pointed out that the purpose of the Bankruptcy Act is to rehabilitate the bankrupt and the county's inefficient behavior, if excused, "could be catastrophic in relation to the attempts to rehabilitate a bankrupt in a case where monies were due the governmental bodies that refused to reasonably perform and still claimed non-dischargeability positions." Thus, the debt was discharged by order of the court pursuant to Section 2a(15). See Sec. 2a(15) [§ 105] at ¶ 7045 and Sec. 17a(7) [§ 523(a)(5)] at ¶ 9231.