The question asked most about support obligations and bankruptcy is “Are support payments dischargeable in bankruptcy?”
This question is rather difficult to answer because there are different types of payments and debts associated with a divorce. But let’s eliminate the easy one first.
You cannot discharge domestic support obligations in either Chapter 7 or Chapter 13 bankruptcies. There really is no need to go into great detail here because any way you slice it these debts are not dischargeable in bankruptcy.
However, there should be a distinction made here between support and property settlements. While it is true that support obligations are not dischargeable, property settlement obligations may be.
Let’s use this example to make the distinction:
In your divorce you were ordered to pay $2000 per month in spousal support, $1000 per month in child support, and $500 per month as a property buyout (say for equity in a home, or car, or furniture that you did not want liquidated) or to pay your former spouses attorney fees.
The $2000 spousal support payment and the $1000 child support payment are exempted from discharge as domestic support obligations. But, the $500 per month payment in this scenario would in fact be discharged in a Chapter 13 bankruptcy.
To be clear, this is only the case in a Chapter 13 bankruptcy, not a Chapter 7. A discharge does not discharge an individual debtor from any debt owed to a spouse, former spouse or child of the debtor.
In a case like this, it may or may not be worth it to subject yourself to the requirements of a Chapter 13 bankruptcy (they last for a minimum of 36 months and as long as 60 months).
However, let’s look at another example:
In your divorce you were ordered to pay $2000 per month in spousal support, $1000 per month in child support, and you were ordered to pay $5000 per month to buy your former spouse out of her interest in your home and pay her attorney’s fees totaling $200,000 dollars.
Here, it may certainly be in worth the time, effort and cost associated with Chapter 13 to get out from under such a heavy burden.
Please keep in mind that these facts are extreme to make the point as this set of facts are extremely unlikely. But hopefully you get the point that domestic support obligations are not dischargeable, but property settlement obligations may very well be.
You absolutely must consult with an attorney that understands the complexities of both bankruptcy and family law before ever making the leap into bankruptcy to discharge any divorce obligation.
At Doyle Quane Family Law Group, experienced attorneys understand the intricacies of both dissolution and bankruptcy and the issues that cross over between the two. Contact us for an in depth analysis of your dissolution and potential bankruptcy issues.