When people consider bankruptcy, they are concerned about the impact on their financial obligations. This includes spousal maintenance or alimony. Many people wonder if filing for bankruptcy will discharge the obligation to pay alimony, or if it will still be required.
Can Alimony Be Discharged in Bankruptcy?
It is crucial to first understand that bankruptcy offers protection for those who are struggling under overwhelming debt. Chapter 7 and Chapter 13 are the two main types of bankruptcy filed by individuals. Alimony is handled differently in each type of bankruptcy.
Non-Dischargeable Debts:
Alimony is a priority debt in Chapter 7 bankruptcy and cannot be discharged. You must pay your priority debts with all available funds.
In Chapter 13 bankruptcies, alimony may be considered either a secured debt or an unsecured one, depending on the facts of the case. If alimony is a secured debt, you will have to pay it before any other unsecured debts.
Some creditors may designate certain debts as non-dischargeable, meaning they cannot be eliminated by bankruptcy. Non-dischargeable credit usually falls into one of three categories:
Taxes, including the majority of income tax debt.
Various types of loans, including student loans backed by the government.
Unpaid loans: Court judgments, debts relating to family court cases (alimony is included in this category), and debts incurred through fraud or malicious behavior.
A debtor who took out a credit card with no intention of paying it back could not have it discharged. Creditors can also object to a discharge in bankruptcy if they prove that the debtor committed fraud, such as lying about income or assets when applying for credit or loans.
Are Your Debts Dischargeable?
Understanding the non-dischargeable obligations in bankruptcy will help you navigate a complex system. Although bankruptcy can help you get your finances back on track and manage your debts, it might not eliminate all of them.
You should speak to an experienced bankruptcy lawyer who can give you advice on how your debts will survive the bankruptcy procedure. You can then determine if bankruptcy is right for you and which debts need to be paid off. The right advice and information can have a major impact on your financial future.
Alimony:
When deciding whether alimony is eligible for bankruptcy protection, the court will take into account several factors. These include:
- The amount of alimony due.
- How long you have paid alimony.
- The justification for bankruptcy.
You may still be liable for alimony even after bankruptcy. It is also important to inform your ex-spouse, or their lawyer, of your intention to file for bankruptcy. They can then file a claim in court to explain why they do not want the debt discharged.
In some cases, alimony may be discharged in bankruptcy. Consult an experienced bankruptcy lawyer to determine if alimony can be discharged in your case. Working with an attorney will help you better understand your options, and you can then make an informed choice about what to do. Bankruptcy can be a great tool for getting back on track financially, and an experienced attorney will help you maximize this opportunity.
This post was written by Trey Wright, one of the best bankruptcy lawyers in Tallahassee! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, specializing in bankruptcy law, estate planning, and business litigation.
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