Bankruptcies include all domestic support obligations. A Spouse must be listed as a creditor in bankruptcy. The Spouse is directly notified by the Court of the filing of the Bankruptcy. The Spouse is a priority creditor. Below we consider if support obligations are dischargeable and where are increase requests handled.
What are domestic support obligations?
Bankruptcy code defines a domestic support obligation as 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.
As a priority creditor, the spouse is paid before other creditors. In addition, this priority creditor is paid in full (100% of amount owed).
Domestic support obligations listed in a bankruptcy filing must be paid by the Debtor. If not paid, the Chapter 13 Plan can be dismissed.
What happens when an increase is requested by the spouse in a Chapter 13 Bankruptcy? Below is an example. The spouse requested an increase in support obligations. She filed to the Bankruptcy Court. The Debtor’s dependent attends college and more expenses arose.
- Husband is in a Chapter 13 Bankruptcy
- His Chapter 13 bankruptcy includes domestic support obligations
- These obligations are non-dischargeable.
- After the bankruptcy filing, the Wife applies in State Court for additional support due to dependent’s college expenses.
- Wife asks bankruptcy court permission to pursue an additional support application in State Court.
- The Bankruptcy Court encourages state court judges to hear domestic relations cases
- Although unopposed, the wife’s request is denied.
- Bankruptcy Court ruled that state courts can decide domestic support cases.
- No approval is required from the Bankruptcy Court.
- However, state courts cannot modify the bankruptcy stay
- The State Courts determine if the relief requested violates the stay in the context of modifying a child support order.
However, these particular stay reliefs affect so few of proceedings. In this regard, the Bankruptcy Court encourages state judges to rule on these matters.
Bankruptcy judges are not marital settlement agreement judges. It is preferable that these matters continue in State Court Family Law Division.
Domestic Support Obligations Dischargeability
- These obligations are non-dischargeable in Chapter 7 or 13 bankruptcies.
I am a bankruptcy lawyer who can help you if you have difficulty meeting your monthly financial obligations. I offer a free bankruptcy consultation. During our meeting, I will advise you if filing bankruptcy is right for your circumstances.
Call me today – Ralph A. Ferro, Jr., Esq. (201) 446-5904.