How Bankruptcy Affects Spousal Support
Many debts are considered dischargeable under bankruptcy, but spousal or child support is usually not among them.
Spousal support and child support are what is known as domestic support obligations. 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.
In the case of a former marriage where the one spouse is paying alimony to his or her former partner, 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 example, if a couple is divorced and the man makes an agreement to 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.
One of the few times that a support obligation is dischargeable is under certain circumstances when it has been assigned to a private entity. For example, if the wife in the previous example used the husbands payments to her as collateral for another purchase, the debt would then most likely be dischargeable.
There are also instances where debts that are normally 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 non-dischargeable and you will end up owing nothing on it. However, if the credit card company then goes after your wife to collect the $10,000, you wife may then hold you responsible. In this case, the debt could now become classified as a domestic support obligation and therefore be ruled as non-dischargeable.
When filing for bankruptcy, you will be assigned a trustee. 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.
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.
