subject: Bankruptcy And Domestic Support Obligations [print this page] Although most debts are found to be dischargeable under bankruptcy, spousal or child support is usually not among them.
The legal name for spousal support and child support is domestic support obligations. To the person filing for bankruptcy, these are a form of debt. These types of obligations are created when a court order or separation agreement instructs a person to make payments to a second party. This party may be a former marriage partner, a child from a former relationship, the federal government, state or local government, or any type of similar agreement.
Normally, in pretty much every bankruptcy case, if the filer is paying alimony to a spouse from a prior wedding, the alimony payments are not dischargeable. But what is less well known is that possible other payment arrangements that you have made with your spouse are non-dischargeable as well.
For instance, assume that a man and his wife are divorced. He then makes an agreement with her to help her out and pay for half of the former wife's car. The amount that he promised will probably not be discharged if he files for bankruptcy. Therefore, once the bankruptcy goes through, he is still responsible for making half of the payments on that car.
There are times, however, when a support obligation will be deemed dischargeable. One of these times is when the debt has been assigned to a private entity. For instance, if the wife in the former example used the husbands payments to her as collateral for another purchase, the debt would then most likely be dischargeable.
The reverse is true as well. In some cases, debts that would normally be considered dischargeable, such as credit card debts, will become non-dischargeable. For example if, while married, you amass a credit card bill of $10,000 and then file for bankruptcy, the debt will become dischargeable and you will end up owing nothing on it.
However, if the credit card company were to go after your wife to collect that $10,000, your wife may then turn around and try to hold you responsible. In this case, the debt could now become classified as a domestic support obligation and therefore be ruled as non-dischargeable.
As a bankruptcy filer, the most important person to you is the bankruptcy trustee. This person is assigned to you after you turn in your filing papers. In large part, he will be the person making the determinations as to which debts are dischargeable and which ones are not after carefully reviewing all the facts of the case. From your standpoint, the key is not to assume anything until after the bankruptcy has been finalized and you have all of your remaining debts in writing.
Bankruptcy rules can be complex at times. But anytime that you have doubts about what is or what is not dischargeable under the bankruptcy rules in your state, ask your bankruptcy lawyer or your trustee.
