Bankruptcy’s effect on child support is very similar to its effect on alimony. Past-due child support is not dischargeable in bankruptcy. If one spouse owes child support but has not paid because of hard times, the past-due amount still must be paid. A bankruptcy court can discharge many debts, but the court cannot discharge a child support debt (or an alimony debt). Severe financial problems (as evidenced by the bankruptcy) could be a basis for reducing future child support payments, but not for reducing past-due payments.
A property settlement might be dischargeable in bankruptcy or it might not be dischargeable, depending on the facts of the case. A discharge in bankruptcy means that all of a debt or a portion of a debt no longer has to be paid, because a federal court has declared the debtor to be bankrupt.
Prior to 1994, many former spouses of persons who declared bankruptcy after the divorce found themselves out of luck when seeking to collect what was due. A wife, for example, may have agreed to a divorce based on a promise from her husband that three years after the divorce, he would pay her a certain amount of money as part of the property settlement. If after the divorce was finalized, the husband declared bankruptcy, the wife might never collect the amount that was due.
By: Mitchell Allen
Takeaway: When bankruptcy’s looming, sometimes the best thing you can do is buy yourself some time.
This article is an excerpt to “A Survival Guide to Debt” by Mitchell Allen.
When you’re sick and you go to the doctor’s office, the first thing he or she asks (when the doctor finally gets to you) is usually something like, “So, what seems to be the problem?” That’s when you get to describe your symptoms so that the doctor can start figuring out what medicines to prescribe and what other treatments to recommend.
Takeaway: Timing is crucial when it comes to divorce and bankruptcy proceedings, as is knowing what to expect when the cases are closed.
In many cases, personal bankruptcy and divorce go hand in hand. Money is one of the top reasons that couples fight; therefore, money is one of the top factors in a divorce. Sometimes, couples cannot resolve their issues about money, and one or both spouses decide that the marriage is irretrievably broken. In this event, one or both spouses may file for a divorce to have the marriage dissolved. Unfortunately, if the spouses have accumulated a significant amount of joint marital debt (or they live in a state where marital debt is divided equally, regardless of whose name the debts are in), filing for divorce may only make the money problems much worse.