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.
If you are still married and are contemplating a divorce, a joint bankruptcy might make your separate lives easier in the future. Assume that you divorce without filing bankruptcy. If you owe some debts jointly, the divorce decree should direct which of you is supposed to pay each of those debts. If instead the divorce is unclear as to who should pay a debt, cooperation will be necessary for you to maintain the peace. This is often a problem in divorce. It usually works best for each spouse to be totally responsible for paying any given debt.
Moreover, even if the divorce decree clearly assigns each spouse separate debts to pay, that does not affect the right of the creditor to collect from either one of you if both names are on the account. Thus, if the ex is supposed to pay, but does not pay, you can still be sued by the creditor, regardless of what the divorce decree provides. If you are sued, your remedy would be against the ex-spouse, not the creditor. You would have to return to Superior Court to file a Motion for Contempt to make the ex-spouse pay as ordered. Similarly, you may not owe debts jointly with your spouse, but a divorce court still can order you to pay a debt that never was in your name… as part of a “division of marital liabilities”.
When you file for divorce, you want to achieve peace if at all possible. You don’t want to set yourself up for future conflicts either with your ex or with your old creditors. If you file bankruptcy and wipe out these debts, neither one of you will have to pay them in the future, and the divorce decree will not need to address them. This if often the best strategy for avoiding stress and conflict in your future life. Call us at 678-519-4143 to discuss your particular situation with our lawyers.