Legally reviewed by Allen A. Kolber, Esq. - The Law Offices of Allen A. Kolber, Esq., P.C.
Key Takeaways
- Alimony and child support cannot be discharged in any chapter.
- A property settlement can be discharged by completing a Chapter 13 plan.
- The automatic stay does not stop support collection or wage withholding.
- Modification is decided by the family court, not the bankruptcy court.
If ordered with the post-divorce financial obligation of alimony, you may have to make regular payments to your former spouse so as to maintain the standard of living they established during the marriage. Since this is not a permanent financial agreement, you may be wondering how this will be affected if you file for bankruptcy during this time. Find out if you will be required to continue alimony payments if you declare bankruptcy and how an experienced Suffern New York bankruptcy attorney at the Law Offices of Allen A. Kolber, Esq. can help you modify your agreement.
Will I need to continue making alimony payments if I file for bankruptcy?
It should not be assumed that filing for bankruptcy automatically means stopping your alimony payments. When filing for bankruptcy, there are two types of debt considered. The first is dischargeable debt, like credit card debt, which will most likely be wiped out in the process. The second is non-dischargeable debt, which will most likely remain and be required to pay off. With that being said, domestic support obligations, like alimony, fall under non-dischargeable debt.
Specifically, if you are filing for Chapter 7 bankruptcy, your alimony debts will not be dischargeable. And if you are filing for Chapter 13 bankruptcy, your alimony will be considered a priority debt and included in your monthly payment plan. This will, thus, need to be paid throughout and after your bankruptcy proceedings. For any additional inquiries, contact a skilled Rockland County Chapter 7 bankruptcy attorney or a Rockland County Chapter 13 bankruptcy attorney.
Not Everything From a Divorce Is Support
A divorce judgment essentially establishes two different forms of obligation, and they are treated differently during bankruptcy.
- Domestic support, like alimony, spousal maintenance, and child support, is what the rest of this page is in regard to
- A property settlement is different: an equalization payment for the house, an agreement to take on a joint credit card, or any other promise to hold your spouse harmless on a debt
Support is never discharged during bankruptcy in any chapter. A property settlement will survive a Chapter 7 filing, but the list of debts that are excluded from a completed Chapter 13 discharge does not include it. As such, a debtor who completes a Chapter 13 plan may discharge a property settlement obligation that is otherwise nondischargeable during Chapter 7.
How an obligation is referred to in the judgment does not determine which one it is. The court will look at what the obligation was actually for. If a meaningful part of what you owe is the result of property division rather than domestic support, you may want to have someone closely review what the divorce decree actually says before determining what chapter to file.
The Automatic Stay Does Not Stop Support Enforcement
Filing does not buy you a pause on this. The stay carries an express exception for domestic support, and the list of what continues regardless is long.
- Establishing or modifying a support order
- Collecting support from anything that is not property of the bankruptcy estate
- Withholding income to pay support under an existing order
- Suspending a driver’s, professional, or recreational license
- Intercepting a tax refund and reporting the arrears to credit bureaus
Your exemptions offer no shelter here either. Property you have exempted stays liable for support claims during the case and after it, which is not true of ordinary creditors.
How Do I Modify Alimony Payments During Bankruptcy?
Even though you will have to continue your alimony payments during your bankruptcy, you may still have the opportunity to petition for a modification of your support obligation. This petition belongs in the family court responsible for issuing the order, not the bankruptcy court. A bankruptcy judge will not rewrite a support order, and until the family court approves a modification, you must keep paying the amount as ordered in the decree.
For example, if your filing for bankruptcy is related to unexpectedly losing a job, earning less money than at the time the agreement was reached, or developing a serious medical condition that translates into serious medical bills, then you may request a post-judgment modification to your alimony payments that better reflects your current financial status.
It is important to note that you cannot modify your agreement if your unemployment is due to your quitting or being fired for negligence or criminal misbehavior.
On the flip side, you can argue that your former spouse’s financial situation has improved since the time of the settlement agreement, whether it be due to remarrying, coming into an inheritance, or otherwise becoming financially independent, and thus a reduction or elimination of your alimony payments is in order.
Contact Our Experienced New York Bankruptcy Firm Today
If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options. If you have any further questions regarding your alimony debt, do not hesitate to reach out to our firm today to learn how we can represent you during these difficult times.
