My Former Spouse Filed Bankruptcy: What Should I do?

You just found out that your former spouse filed bankruptcy and you don’t know what to do. The spouse may still owe you child support, alimony, or money from a property settlement. How will a bankruptcy affect those obligations? The answer depends on the Chapter of bankruptcy that is filed and the type of obligation that is owed to you.former

Can My Ex Get Out Of Paying Me ?

Alimony, Child Support, and Domestic Support Obligations

Alimony and child support are considered “domestic support obligations” under 11 U.S.C. § 101(14)(C). A domestic support obligation is a debt owed to a debtor’s child or former spouse in the nature of alimony, maintenance, or support arising out of a court order. The payment can be made directly to the spouse or to a third party on behalf of a spouse. For example, if an order or agreement requires the former spouse to pay a creditor such as a car payment as part of a support obligation, that would also be a domestic support obligation along with direct payments for alimony or child support.

The good news if you are the person receiving the support is that a domestic support obligation is non-dischargeable in a Chapter 7 or a Chapter 13 bankruptcy.

Property Division Distributive Awards Including Payment of Debts

As far as distributive awards of money or the assumption of debt as part of a property settlement, the rules are different. Under Chapter 7, these debts are non-dischargeable. So if your former spouse filed bankruptcy but is obligated to pay you a distributive award or pay debts on your behalf as part as a property settlement, he/she cannot discharge that obligation in a Chapter 7 bankruptcy.

The former spouse might be able to discharge a distributive award or other payment obligation under a property settlement order or agreement in a Chapter 13 bankruptcy. Under Chapter 13, these obligations are most often considered unsecured debts that may be paid according to the debtor’s ability to pay. In some cases, the amount may be greatly reduced or even become zero.

One issue that often arises is when a claim for alimony is dismissed in exchange for the former spouse paying marital debt. Without careful language in your agreement or court order, the former spouse’s obligation to pay these debts under a Chapter 13 may be discharged. The worst-case scenario is when you dismiss an alimony claim because of the terms of a property settlement, and then the other person files Chapter 13. You are then stuck paying a bill or not receiving money and there is usually nothing that can be done about it afterward.

A Family Law Attorney With Bankruptcy Experience Can Help

It is important to act quickly when your former spouse files bankruptcy as you may need to take specific action within a narrow time frame to preserve your claim You should enlist the services of a bankruptcy attorney or a family law attorney who has experience in bankruptcy cases to advise you when the other party files bankruptcy. Perhaps more important, it is better to have an experienced family lawyer on your side BEFORE you reach a settlement to put you in the best position to avoid negative consequences of a bankruptcy in the future.