By: Joemar Pasco
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Can Alimony be Discharged in Bankruptcy?
Alimony is when one former spouse supports the other after the marriage has ended. Alimony can be arranged before the divorce or court-ordered by a judge. Alimony is often arranged for the partner who stayed home at took care of the house and kids.
Can You File for Bankruptcy and Divorce at the same time?
You can, depending on your state’s laws. That places a “stop” on any legal actions or creditor payments until the divorce has officially been filed. Two exceptions to the rule are child custody and alimony. You may have placed a stop on your creditors, but you are still responsible for any alimony you owe your ex.
What will happen to Alimony during Bankruptcy?
Some men or women like to get their duties to alimony expunged during bankruptcy. That can be a challenge when you take a look at Section 523(a)(5) of the Bankruptcy Codes. The code specifically states that no spouse can have their alimony duties expunged, no matter what their reasoning is.
Section 523(a)(5) Explained
The spouse is listed as one of the “creditors.” On the one hand, you are not obligated to be held accountable to a creditor when you file for bankruptcy and divorce at the same time. However, your spouse is a different thing entirely. Your spouse might be listed as a “creditor”, but he or she is still a spouse. That is why, under Section 523(a)(5), you cannot have your duties expunged.
This is one of those ” many shades of grey” under the eyes of the law. Under the bankruptcy laws, it counts as “spousal support.” Now, the one exception is when something is listed as domestic support under the divorce petition guidelines. The one exception is when there is a late fee attached to alimony.
Example-Based On Real Events
The ex-husband failed to pay his alimony on time. The courts, in this instance, imposed a late fee. However, that late fee was not considered part of the domestic spousal support. The courts ruled the late fee is meant to discourage late payments, no more or less.
The Three Cases Which Makes Everything Null and Void
1) The spouse who gets the payments legally assigned to someone else.
3) There could also be an economic factor too. One partner’s current financial state could be thrown into chaos. He or she might not make the money they used to, which impacts his or her ability to pay support. One party’s debt could be discharged through property division, leaving the remaining debt in the hands of the other partner.
These three instances will get sorted out in the family court.