"a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable non-bankruptcy law notwithstanding any other provision of this title, that is
(A) owed to or recoverable by
(i) a spouse, former spouse, or child of the debtor or such child's parent, legal guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child's parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of--
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child's parent, legal guardian, or responsible relative for the purpose of collecting the debt.”
Domestic Support Obligations are generally non-dischargeable debts (except in some cases in a Chapter 13 after partial payment). This means that even if a spouse or former spouse files for bankruptcy, the Divorce Court can still order them to pay alimony or child support, and can still make orders relating to the collection of alimony and child support. This information is very important because it often means that an ex-spouse filing for bankruptcy can actually be helpful when alimony or child support is owed. Since the debtors other debts are now stayed and likely dischargeable, the alimony and child support will be easier to pay.
In addition, our previous post highlighted one of the ways that the category of "domestic support obligation" can be used to avoid problems such as the discharge of joint debts by categorizing certain payments as alimony.
Understanding what is and what is not a "domestic support obligation" can be very important in drafting and enforcing Divorce Agreements. In order to avoid costly mistakes for divorce clients, we encourage divorce practitioners to consult with bankruptcy counsel when there is the potential that one party in the divorce will file for bankruptcy.
Click here to read Fact #1: The Automatic Stay.
When my husband and I divorced I was required to pay some of our credit card debt. I am now seriously considering filing bankruptcy. I qualify for a Chpt. 7 filing. I have no assets and little income beyond alimony. It's been suggested to me I should file Chpt 13 to protect myself if my ex-husband comes after me for my portion of the joint debt that has been discharged. What do you think?
ReplyDeleteIn response to Anonymous: It is not possible to give you specific legal advice about your case in this forum, because I would need to know a lot more details about your case. Generally I can say that there are differences between how a Chapter 7 and a Chapter 13 handle domestic support obligations. But that is not the only consideration as to which type of bankruptcy may be best in each case. Whether or not credit card debts would even be considered domestic orders under the bankruptcy code will depend on how the Judgment or Agreement was worded. You should take your Agreement or Judgment to a knowledgeable bankruptcy attorney for specific advice about what is best in your case.
ReplyDelete