Andrew B Clawson
In my Utah bankruptcy practice, I help a lot of people who have been divorced. One of the most common reasons that divorced folks end up in my office is because they have gotten behind on their child support or alimony payments and can’t get caught up. For some, the Utah Office of Recovery Services might even be garnishing 25% paychecks to pay their support arrearages. Luckily for them, the bankruptcy toolbox is full of tools to help them manage their divorce-related obligations.
Under the bankruptcy code, court-ordered “domestic support obligations”, including child support and alimony, are not discharged in either chapter 7 or chapter 13 bankruptcy. For good reason, Congress decided that since the recipients of these types of maintenance obligations depend on child support and alimony for their financial support, they cannot be discharged through bankruptcy.
But that doesn’t mean that bankruptcy isn’t an extremely helpful tool when it comes to dealing with child support or alimony obligations.
Child Support and Alimony in Chapter 13 Bankruptcy
For some clients who have gotten behind on their child support or other alimony payments, chapter 13 bankruptcy makes better sense. Although “domestic support” arrearages can’t be discharged in a Utah chapter 13 bankruptcy case, such arrearages can (and in fact must) through the chapter 13 bankruptcy plan. In fact, child support and alimony arrears paid through a bankruptcy plan are paid at the expense of most other creditors and are spread out over a 3 to 5 year period. This tool of paying back domestic-support-obligation arrears through a chapter 13 bankruptcy is especially helpful for clients are having 25% of their checks garnished by the Utah Office of Recovery Services to pay back child support arrears.
Child Support and Alimony in Chapter 13 Bankruptcy
Other clients might not have enough income to pay both their ordinary debts and their alimony or child-support payments. In these cases, we often use a chapter 7 bankruptcy to eliminate the ordinary debts and, thereby, free up money that they can use to stay current, or catch up, on their support payments. An added bonus to using a chapter 7 bankruptcy in a case where a client is behind on their child support or alimony payments is that assets or money that that a chapter 7 bankruptcy trustee collects are used to pay down the non-dischargeable child support, alimony, and other domestic support arrearages—even before the chapter 7 bankruptcy trustee gets paid.
Other Divorce Related Obligations and Debts
For other obligations and debts ordered to be paid as part of a divorce, such as joint debts ordered to be paid by one spouse, are treated even more favorably and can even be eliminated in a chapter 13 bankruptcy. There are some caveats to this rule, which I’ll discuss in a later post.
In short, a bankruptcy in Utah can be an awesome tool for managing child support and alimony obligations and arrearages.
Need help? Get a free bankruptcy evaluation to see if bankruptcy is right for you.
Andrew Clawson
“The Utah Bankruptcy Lawyer”
