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DISCHARGE OF BANKRUPTCY DIVORCE DEBTS

TYPE OF DEBT
.........................................
TYPE OF BANKRUPTCY
 
   
DISCHARGEABLE?
ACTION NEEDED?
Domestic Support Obligations ("in the nature of" child and/or spousal support / maintenance)

Chapter 7 and Chapter 11 and Chapter 13
Not dischargeable.
No bankruptcy court litigation is necessary except possibly to resolve a dispute of whether or not debt is "in the nature of" support.

Settlement agreements or decrees regarding divorce property and non-suppport types of debts
Chapter 7 and Chapter 11
Dischargeable as to a creditor but not dischargeable as to any obligation to reimburse the spouse for payments that such spouse made or owes to that creditor.

No bankruptcy court litigation is necessary.  But spouse sometimes might have to sue delinquent debtor in State court to enforce this type of obligation.


Chapter 13 Dischargeable (after paying  as much as feasible to the spouse under an approved Chapter 13 "plan").
Spouse might, in certain cases, be able to reopen the State court divorce case and seek modification to equitably reallocate  the terms closer to the original obligation amounts before the debtor received the bankruptcy discharge.

Automatic Stay: Bankruptcy automatically stops a pending divorce (dissolution of marriage) case for a period of time regarding property division; but it does not stop the divorce case concerning issues of termination of marriage, support, alimony, child visitation, paternity, and domestic violence for example.

Spouse's Divorce Attorney's Fees: If the marital agreement or divorce decree states that the debtor owes all or part of the spouse's
attorney’s fees, then, depending on the facts and terms, such attorney's fees may or may not be dischargeable in bankruptcy.

Timing of Divorce and Bankruptcy: Debtor and his or her spouse may both file bankruptcy together or separately; or one may file bankruptcy and not the other; one or both may file a Chapter 7, 11 or 13 type of bankruptcy before, during or after the divorce case.  Any and all of the scenarios may have an effect on the dischargeability and the obligations that flow from the divorce as well as the strategies implimented.

Seek Legal Counsel: Due to the complexities involved, divorce attorneys, tax professionals, and bankruptcy attorneys ought to be consulted and/or retained before filing a bankruptcy in which a divorce is or may be involved.

Consider Marital Counseling: Lastly, if you have not already done so, I encourage you (or both of you) to seek out professional marital counseling and/or, for believers, pastoral counseling with a godly and wise minister/pastor at a Bible-believing Christian church.  Although you may perceive that there are "irreconcilable differences" beyond repair, sometimes a neutral person such as a counselor, minister or pastor can help the parties sees the issues more clearly and help provide solutions to seemingly impossible situations.  There is nothing to lose by going at least one time.  "With God, all things are possible" (Matthew 19:26; Mark 10:27).  God freely reconciled us through Jesus when we were impossibly rebellious sinners (bridging an infinite gulf of separation), and if God can restore our relationship with Himself, then certainly he can capably restore a marital relationship to those who will trust Him to do so! (Mark 9:23).  But whatever happens, God will work all things together for your ultimate good (Romans 8:28).

Copyright 2013

Author: Mathew B. Tozer


Disclaimer


Under the new bankruptcy laws, Matthew Tozer is a debt relief agency because he helps people file for bankruptcy relief under the Bankruptcy Code.

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