Obligee

An obligee is someone to whom something is owed. In addition, an obligee is someone who is legally obliged to receive something from another person. For example, an obligee – in family law – is the parent to whom child support has been awarded by the court, which must be paid by the other parent, and which must be received by the custodial parent. The individual obligated to pay is referred to as the obligor, debtor, or promiser. To explore this concept, consider the following obligee definition.

Definition of Obligee

Noun

  1. Someone to whom another is legally obligated.

Origin

1565-1575

What is an Obligee

An obligee is a person to whom a legal debt or other obligation is owed. In family law, an obligee would be the individual who would be in receipt of child support, alimony, or both. In civil law, an obligee may be in receipt of the proceeds from a contract or promissory note. Other examples of obligees include insurance policy holders, creditors, and lenders. These are all individuals who are to receive payment in the event that circumstances dictate they are to receive payment.

For instance, an insurance policy holder would receive a payment up to or equal to the value of his home in the event that his house was destroyed in a natural disaster. By paying into the insurance policy, the policy holder is protected by law in receiving payment as agreed in the event of a worst-case scenario. If the insurance company was to refuse or neglect to pay as agreed, then the policy holder is entitled to take the insurance company to court to enforce payment. In this case, the homeowner would be the obligee.

Obligor

An obligor is an individual is obligated, or who has been ordered by a court, to pay a debt to another party. For instance, in family law, the obligor parent would be ordered to pay child support, alimony, or both to the other parent. The other parent, then, is the obligee. Typically, the rule in family law is that once child support has accrued, the obligor is then required to pay the amount in arrears, regardless of any outside circumstances.

For example, an obligee is to receive $500 per month from the obligor, per the court’s order. If the obligor fails to make a payment for three months, and if he does not seek to have the court order modified, then he will be in arrears of $1,500. Even if he has lost his job, he will still owe that $1,500. Child support, unlike other judgments, cannot be written off with a bankruptcy claim. The money remains due and owing by the obligor, no matter what.

If an obligor falls behind on his child support, he can suffer a slew of problems, including the loss of his driver’s license and garnishing of his wages. It is therefore critical for the obligor to either pay what he owes when he owes it, or to file an immediate modification petition to reduce his monthly obligation.

Like obligees, obligors can also be joint or several. Joint obligors agree to pay an obligation together. Several obligors exist when one or more obligors bind themselves to performing the obligation as individuals. To become an obligor, an individual must, either by himself or through his attorney, enter into an obligation and then execute it himself. If an individual signs and seals a contract as his own and delivers on it, then he is still bound by the contract even if his name is not mentioned specifically.

Final Orders

Parents are often frustrated when the family court issues what are called “final orders” with regard to child support. This is because the orders are far from being final. Any time the obligor parent receives a significant pay raise, the obligee parent can petition the court for an increase in child support. The court may then order a new amount each month based on the obligor’s changed level of income. Similarly, if the obligor loses his or her job, he or she can file for a reduction in the amount owed each month.

The same goes for the obligee parent. If the obligee’s income increases, then the obligor can file a motion requesting to have the child support recalculated in an effort to pay less each month. If, however, the obligee loses his or her job and is not earning as much as when the final order was issued, the obligee may petition the court to increase the amount of child support paid to supplement the lost income.

If the obligor fails to pay child support as ordered, then the obligee can file a motion to enforce payment. In some states, a child who has reached the age of eighteen years old may be able to sue the obligor in order to recoup back child support from his parent.

Once an obligor goes into arrears for child support, this is never removed from his or her record. Further, if an obligor fails to pay child support for the entirety of the child’s life, then the arrears can be obtained by forcing the obligor to sell his assets to pay them off. Once an award of child support is ordered, the obligor must pay as ordered, on time and in full, even if the obligee does not take him to court to enforce it.

Obligee Example Involving a United States Veteran

An example of an obligee involves a veteran who experienced a change in circumstances and a reduction in income years after agreeing to pay his wife a set amount of money in their divorce. In 1991, John Howell and his wife, Sandra, were granted a divorce. The Arizona Superior Court had granted to Sandra, the obligee, half of the benefits John was to receive from his Military Retirement Plan (MRP). John began receiving his retirement funds upon retiring from the Air Force in 1992.

In 2005, the Department of Veterans’ Affairs determined that John was suffering from a degenerative disease in his shoulder. Further, it was determined that his time in the service had directly caused his disease, and that the disease was costing him a net loss of 20 percent of his earnings. Because of this reduction in earnings, John was entitled to tax-exempt military disability payments. However, to receive said payments, John had to waive an equal portion of his MPR benefits. He did just that in July of 2004.

Sandra sued John in 2013, claiming that she was still entitled to receive 50 percent of the MRP benefits that John was receiving, regardless of the fact that he waived a portion of his benefits. The Arizona Superior Court ruled in Sandra’s favor, and the Arizona Court of Appeals affirmed when John appealed. John took the case to the Arizona Supreme Court, though he lost there too, as the Court affirmed the appellate court’s decision.

The Court’s reasoning was that courts were split insofar as the rules after a divorce had been granted. The lower court did not grant Sandra half of the MRP specifically, but in John’s assets as a whole. Therefore, the Arizona Supreme Court held that Sandra was now free to force John to compensate her for the loss she would suffer as a result of his waiver of a portion of the benefits they both shared.

John brought the case before the Supreme Court of the United States, so as to challenge the Arizona Supreme Court’s decision. John was finally victorious, as the Court here ruled unanimously in his favor. The Court held that state courts were prohibited from treating the amount waived from the MRP as a community asset to be divided between the spouses in a divorce proceeding. Although the waiver here happened after the divorce proceedings had already completed, this did not change the fact that the state court only had the power to award Sandra an interest in the military retirement pay that was later subject to being reduced.

Said the Court in its decision:

“In this case a State treated as community property and awarded to a veteran’s spouse upon divorce a portion of the veteran’s total retirement pay. Long after the divorce, the veteran waived a share of the retirement pay in order to receive nontaxable disability benefits from the Federal Government instead. Can the State subsequently increase, pro rata, the amount the divorced spouse receives each month from the veteran’s retirement pay in order to indemnify the divorced spouse for the loss caused by the veteran’s waiver? The question is complicated, but the answer is not. Our cases and the statute make clear that the answer to the indemnification question is ‘no’.”

Related Legal Terms and Issues

  • Arrears – A debt that is overdue after an individual misses one or more required payments.
  • Bankruptcy – A federal court procedure by which individuals and entities can get rid of debts they are unable to pay.
  • Contract – An agreement between two or more parties in which a promise is made to do or provide something in return for a valuable benefit.
  • Garnish – The legal process by which payments towards a debt can be paid by a third party, usually the individual’s employer, directly to the creditor.
  • Modification – The act of making changes or alterations to a legal contract.
  • Petition – A formal application made, in writing, to a court requesting action on a particular matter.

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