B-205176, FEBRUARY 8, 1982, 61 COMP.GEN. 245

B-205176: Feb 8, 1982

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ETC. - SURVIVOR BENEFIT PLAN - PAYMENTS TO TRUSTEE - COURT ORDER COMPLIANCE ALTHOUGH 10 U.S.C. 1450(I) PROVIDES THAT A SURVIVOR BENEFIT PLAN (SBP) ANNUITY IS NOT SUBJECT TO ASSIGNMENT. SINCE SUCH PROCEEDING IS COMPLETELY VOLUNTARY ON THE PART OF THE DEBTOR AND COURT COULD ORDER THE ANNUITANT TO PAY THE TRUSTEE. GOVERNMENT RECEIVES A GOOD ACQUITTANCE WHEN THE ANNUITY IS PAID TO THE TRUSTEE AT THE REQUEST OF THE ANNUITANT. THE QUESTION WAS PRESENTED BY THE DEPUTY CHIEF. THE FINANCE OFFICER QUESTIONS WHETHER COMPLIANCE WITH THIS ORDER IS REQUIRED IN VIEW OF 10 U.S.C. 1450(I). WHICH PROVIDES THAT AN "ANNUITY UNDER THIS SECTION IS NOT ASSIGNABLE OR SUBJECT TO EXECUTION. THE GOVERNMENT RECEIVES A GOOD ACQUITTANCE AGAINST AN EMPLOYEE WHO IS INVOLVED IN CHAPTER 13 BANKRUPTCY PROCEEDINGS SINCE THE COURT ORDER REQUIRING ASSIGNMENT OF PAY IS BINDING ON THE EMPLOYEE.

B-205176, FEBRUARY 8, 1982, 61 COMP.GEN. 245

BANKRUPTCY - CHAPTER 13 PROCEEDING - BANKRUPT ANNUITANTS, ETC. - SURVIVOR BENEFIT PLAN - PAYMENTS TO TRUSTEE - COURT ORDER COMPLIANCE ALTHOUGH 10 U.S.C. 1450(I) PROVIDES THAT A SURVIVOR BENEFIT PLAN (SBP) ANNUITY IS NOT SUBJECT TO ASSIGNMENT, ATTACHMENT, GARNISHMENT, OR OTHER LEGAL PROCESS, THE ANNUITY MAY BE PAID TO A TRUSTEE IN BANKRUPTCY PURSUANT TO THE ORDER OF A BANKRUPTCY COURT IN A PROCEEDING UNDER CHAPTER 13 OF THE BANKRUPTCY CODE (11 U.S.C. 1301-1330 (SUPP. III, 1979)), SINCE SUCH PROCEEDING IS COMPLETELY VOLUNTARY ON THE PART OF THE DEBTOR AND COURT COULD ORDER THE ANNUITANT TO PAY THE TRUSTEE. THUS, GOVERNMENT RECEIVES A GOOD ACQUITTANCE WHEN THE ANNUITY IS PAID TO THE TRUSTEE AT THE REQUEST OF THE ANNUITANT.

MATTER OF: PAYMENT OF SURVIVOR BENEFIT PLAN ANNUITY TO TRUSTEE IN BANKRUPTCY, FEBRUARY 8, 1982:

AN AIR FORCE OFFICIAL HAS ASKED WHETHER THE DEPARTMENT SHOULD COMPLY WITH A BANKRUPTCY COURT ORDER REQUIRING PAYMENT TO THE TRUSTEE IN BANKRUPTCY OF ALL OR PART OF AN INDIVIDUAL'S SURVIVOR BENEFIT PLAN (SBP) ANNUITY, WHEN THAT INDIVIDUAL HAS FILED A PLAN TO REPAY DEBTS UNDER CHAPTER 13 OF THE BANKRUPTCY CODE, 11 U.S.C. 1301-1330; IN VIEW OF THE RESTRICTION OF 10 U.S.C. 1450(I). WE FIND THAT THE ANNUITY MAY BE PAID TO THE BANKRUPTCY COURT UNDER THIS VOLUNTARY PROCEDURE FOR PAYMENT OF AN INDIVIDUAL'S DEBTS AS PROVIDED FOR IN CHAPTER 13 OF THE BANKRUPTCY CODE.

THE QUESTION WAS PRESENTED BY THE DEPUTY CHIEF, ACCOUNTING AND FINANCE DIVISION, DIRECTORATE OF RESOURCE MANAGEMENT, HEADQUARTERS AIR FORCE ACCOUNTING AND FINANCE CENTER. THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE HAS ASSIGNED THE SUBMISSION CONTROL NUMBER DO-AF- 1377.

A RECIPIENT OF AN SBP ANNUITY UNDER 10 U.S.C. 1450 FILED A PETITION AND PLAN UNDER CHAPTER 13 OF THE BANKRUPTCY CODE, 11 U.S.C. 1301-1330 (SUPP. III, 1979), TO MAKE ARRANGEMENTS TO PAY HER DEBTS. THE BANKRUPTCY COURT ORDERED THAT $142 OF THE INDIVIDUAL'S SBP ANNUITY BE PAID DIRECTLY TO THE BANKRUPTCY TRUSTEE. THE FINANCE OFFICER QUESTIONS WHETHER COMPLIANCE WITH THIS ORDER IS REQUIRED IN VIEW OF 10 U.S.C. 1450(I), WHICH PROVIDES THAT AN "ANNUITY UNDER THIS SECTION IS NOT ASSIGNABLE OR SUBJECT TO EXECUTION, LEVY, ATTACHMENT, GARNISHMENT, OR OTHER LEGAL PROCESS."

IN 47 COMP.GEN. 522(1968) WE DECIDED THAT THE AIR FORCE COULD CONTINUE THEIR POLICY OF COMPLYING WITH BANKRUPTCY COURT ORDERS ISSUED IN PROCEEDINGS UNDER CHAPTER 13 OF THE BANKRUPTCY CODE. WE CONCLUDED THAT EVEN THOUGH THERE HAD BEEN NO WAIVER OF SOVEREIGN IMMUNITY, THE GOVERNMENT RECEIVES A GOOD ACQUITTANCE AGAINST AN EMPLOYEE WHO IS INVOLVED IN CHAPTER 13 BANKRUPTCY PROCEEDINGS SINCE THE COURT ORDER REQUIRING ASSIGNMENT OF PAY IS BINDING ON THE EMPLOYEE. THAT CASE, HOWEVER, DID NOT INVOLVE A PROVISION OF LAW AS SPECIFIC AS 10 U.S.C. 1450(I).

FURTHER, AFTER THAT DECISION WAS ISSUED THE BANKRUPTCY CODE WAS SUBSTANTIALLY REVISED. SEE PUBLIC LAW 95-598, NOVEMBER 6, 1978, 92 STAT. 2549. CHAPTER 13 OF THE CODE, WHICH WAS FORMERLY LIMITED TO WAGE EARNERS, WAS EXPANDED TO AUTHORIZE ANY INDIVIDUAL WITH A REGULAR INCOME - SOCIAL SECURITY RECIPIENTS, ANNUITANTS, ETC.-- TO FILE A PLAN WITH THE COURT FOR THE REPAYMENT OF DEBTS. ADDITIONALLY, THE CONGRESS ADDED SECTIONS TO THE CODE AUTHORIZING BANKRUPTCY COURTS TO ISSUE ORDERS TO GOVERNMENT UNITS IN CHAPTER 13 CASES. SUBSECTION 1325(B) OF TITLE 11, U.S.C. PROVIDES AS FOLLOWS:

(B) AFTER CONFIRMATION OF A PLAN, THE COURT MAY ORDER AN ENTITY FROM WHOM THE DEBTOR RECEIVES INCOME TO PAY ALL OR ANY PART OF SUCH INCOME TO THE TRUSTEE.

ENTITY IS DEFINED IN 11 U.S.C. 101(14) (SUPP. III, 1979) AS INCLUDING ANY PERSON, ESTATE, TRUST, OR GOVERNMENTAL UNIT. "GOVERNMENTAL UNIT" IS DEFINED AS INCLUDING A DEPARTMENT, AGENCY OR INSTRUMENTALITY OF THE UNITED STATES. 11 U.S.C. 101(21) (SUPP. III, 1979).

THE CONGRESS ALSO MADE SPECIFIC REFERENCE TO THE DOCTRINE OF SOVEREIGN IMMUNITY IN 11 U.S.C. 106 (SUPP. III, 1979) WHICH PROVIDES IN SUBSECTION (C):

(C) EXCEPT AS PROVIDED IN SUBSECTIONS (A) AND (B) OF THIS SECTION AND NOTWITHSTANDING ANY ASSERTION OF SOVEREIGN IMMUNITY--

(1) A PROVISION OF THIS TITLE THAT CONTAINS "CREDITOR", "ENTITY", OR "GOVERNMENTAL UNIT" APPLIES TO GOVERNMENTAL UNITS; AND

(2) A DETERMINATION BY THE COURT OF AN ISSUE ARISING UNDER SUCH A PROVISION BINDS GOVERNMENTAL UNITS.

THUS, IT IS CLEAR THAT THE CONGRESS INTENDED TO EXPAND THE COVERAGE OF CHAPTER 13 TO INCLUDE A BROADER SEGMENT OF SOCIETY AND THAT IT INTENDED TO REQUIRE COOPERATION OF GOVERNMENTAL UNITS TO THE SAME EXTENT AS REQUIRED OF OTHER ENTITIES. ALSO, AT LEAST ONE DISTRICT COURT HAS HELD THAT PROVISIONS OF 42 U.S.C. 407, WHICH ARE SIMILAR TO THOSE OF 10 U.S.C. 1450(I) IN THAT THEY PROHIBIT ASSIGNMENT, ATTACHMENT OR GARNISHMENT OF THE PAYMENTS COVERED, DO NOT PRECLUDE SOCIAL SECURITY BENEFITS FROM BEING SUBJECT TO PROCEEDINGS UNDER CHAPTER 13 OF THE BANKRUPTCY CODE. THE COURT REASONED THAT SINCE A DEBTOR IS ALLOWED TO VOLUNTARILY INCLUDE SOCIAL SECURITY BENEFITS AS PROPERTY OF THE ESTATE UNDER A CHAPTER 13 PROCEEDING, THE ASSIGNMENT WAS PROPER AS THE VOLUNTARY ACTION OF THE DEBTOR. IN RE BUREN, 6 B.R. 744, 748 (M.D. TENN. 1980).

HOWEVER, WE DO NOT FIND IT NECESSARY TO DECIDE WHETHER THE BANKRUPTCY CODE SUPERSEDES 10 U.S.C. 1451(I) SINCE THE RATIONALE OF 47 COMP.GEN. 522(1968) IS APPLICABLE TO THE CHAPTER 13 PROCEEDINGS UNDER THE AMENDED BANKRUPTCY CODE. THUS, THE VOLUNTARY ASSIGNMENT OF AN INDIVIDUAL'S ANNUITY PURSUANT TO A CHAPTER 13 BANKRUPTCY PROCEEDING MAY BE HONORED BY THE GOVERNMENT SINCE PAYMENTS MADE PURSUANT TO SUCH AS ASSIGNMENT WILL PROVIDE A GOOD ACQUITTANCE TO THE GOVERNMENT AGAINST THE ANNUITANT.

ACCORDINGLY, THE VOUCHER SUBMITTED FOR PAYMENT TO THE TRUSTEE IN BANKRUPTCY RATHER THAN THE ANNUITANT IS RETURNED FOR PAYMENT.