Bankruptcy in Brief
a service of the Moran Law Group
Family Law/Bankruptcy FAQ's
Bankruptcy Code attempts to protect the rights of children and former spouses to
collect support: whether it is called family support, alimony, or child support, the
bankruptcy code makes it non dischargeable
in bankruptcy. The recipient spouse does not have to do anything for the debt
to be excluded from the discharge.
The automatic stay, which stops other court
proceedings when a bankruptcy is filed, does not apply to actions to establish or modify a
support order or to collect support from post petition wages.
that deduct current support from the debtor's wages are not generally affected by
the bankruptcy filing. Wage orders that collect past due support arguably
are stayed in Chapter 7 and certainly stayed in Chapter 13.
Also, support is a priority claim for purposes of payment from the estate.
Thus in a Chapter 13, payment of past due support is paid before unsecured
creditors, and even before taxes. The recipient spouse must file a proof of claim to receive payment. Chapter 13
frequently works well for both the paying spouse (who is protected from other creditors
while paying back support) and for the recipient spouse ( who gets regular payments from
the trustee made by the debtor voluntarily).
The issues raised when one spouse in a divorce
action files bankruptcy are complex and vary somewhat depending on the property and family
laws of the state.
In general, the filing of a bankruptcy stops all court
proceedings against the debtor; brings into the bankruptcy estate all property of the debtor and
all community property of the debtor and his spouse; and upon entry of a discharge,
relieves the debtor of personal liability for all dischargeable debts.
family court cannot assign marital debts to the debtor after he has received a
discharge and cannot make orders dividing the property of the debtor while the
property is property of the estate.
The family court can divide the property that the debtor exempts; after the
exemption is allowed, that exempt property is no longer property of the estate.
The family court can continue to hear and
decide issues relating to fixing support. Some courts will require an order from the
bankruptcy court, specifically finding that motions to establish or modify support are
outside the bankruptcy stay. See Relief from stay.
If you become involved in such a
proceeding, get advice from an experienced bankruptcy lawyer. Find
The 2005 amendments to the Bankruptcy Code recently made
non support obligations created in connection with a divorce or separation
nondischargeable in Chapter 7 without any action on the part of
the non debtor spouse.
U.S.C. 523 (a)15. Those same obligations are
dischargeable in a Chapter 13.
Just because a creditor is listed by the debtor on the
bankruptcy schedules does not
make the creditor's claim dischargeable.
The debtor is required to list all debts on the schedules, even
debts that are acknowledged to be non dischargeable. So,
listing a debt to a spouse or former spouse does not show either an
intent or perhaps the power to discharge the debt.
The dischargeability of the
debt depends on the nature of the debt (support, property division, lien for equalizing
payment, etc.). Support is non dischargeable without action on the part
of the receiving spouse.
If you know about
the bankruptcy, whether from the court
or through the grapevine, you are charged with finding out what is going on
and taking steps to protect your interests, if necessary.
More on divorce and