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Subscribe to this list via RSS Blog posts tagged in Divorce

Does Filing Chapter 13 Have Any Effect on Obligations Arising in Divorce?

Posted by on in Chapter 13

It’s common knowledge that you can’t “bankrupt on child support or alimony”. Obligations “in the nature of support” (even if they are labeled something else in the divorce decree) have never been dischargeable in bankruptcy. This means that you can’t get rid of them without payment.

Even so, it is possible to stop (“stay”) a contempt proceeding on past due obligations and catch up those debts over a period of years in Chapter 13. Chapter 13 is often used to avoid going to jail on a contempt proceeding. However, the bankruptcy judge will not rewrite a divorce obligation no matter how unfair it is, and no matter what has changed since the divorce was final. Only the Superior Court can do that. The reason is that a divorce is strictly a matter that is governed by state law in state court (Superior Court), whereas bankruptcies are federal. Federal courts will not interfere in matters that are traditionally the subject of state jurisdiction.

Over the years, this principle has become stronger and stronger. It is no longer possible to discharge a property settlement (as distinct from a support obligation) in Chapter 7. Thus, you should not expect to “fix” a bad result in divorce court by filing a Chapter 7 bankruptcy. It may be possible however, under limited circumstances, to pay property settlement obligations less than in full under a Chapter 13, and still receive a discharge. There is nothing easy or automatic about this, and you would have to discuss your particular situation with a lawyer to be confident about how this would work out for you.

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Does Filing Chapter 7 Have Any Effect on Obligations Arising in Divorce?

Posted by on in Chapter 7

It’s common knowledge that you can’t “bankrupt on child support or alimony”. Obligations “in the nature of support” (even if they are labeled something else in the divorce decree) have never been dischargeable in either Chapter 7 or in Chapter 13. This means that you can’t get rid of them without payment.

Over the years, this principle has become stronger and stronger. It is no longer possible to discharge a property settlement (as distinct from a support obligation) in Chapter 7. Thus, you should not expect to “fix” a bad result in divorce court by filing a Chapter 7 bankruptcy. It may be possible however, under limited circumstances, to pay property settlement obligations less than in full under a Chapter 13, and still receive a discharge. There is nothing easy or automatic about this, and you would have to discuss your particular situation with a lawyer to be confident about how this would work out for you.

If you are still married and are merely contemplating a divorce, a joint bankruptcy might make your way easier in the future. Assume that you divorce without filing bankruptcy. If you owe some debts jointly with the ex, the divorce decree should direct which of you is supposed to pay those joint debts. If you share the obligation to pay, that will require good communication and cooperation between you. That might well be a problem. It usually works best for each spouse to be totally responsible for paying any given debt.

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