Is Alimony Dischargeable in Bankruptcy?
Alimony, also called spousal support, domestic support obligation, or maintenance, is a payment from one ex-spouse to another. The payments are typically made after a divorce or legal separation. Alimony can be ordered by a court or agreed upon by the divorcing parties. The spouse who is paying the bills is called the “supporting spouse” that contributes funds to the “dependent spouse”.
Alimony, like child support, is a domestic support obligation that cannot be eliminated in bankruptcy. How can a person afford alimony? Filing Chapter 7 or Chapter 13 bankruptcy might allow an alimony payer to get other debts erased and make the alimony payment more affordable.
How is alimony paid?
Alimony is money paid to a spouse or former spouse after a divorce to assist with ongoing living expenses, such as food. It may be paid in one lump sum or regularly, such as weekly or monthly.
Typically, alimony is paid every month. A judge will sometimes command a spouse to pay a specific sum of money to the other spouse as maintenance, such as in cash or through the transfer of property (separate from the regular process of dividing the couple’s marital property).
Is alimony an unsecured debt?
Unsecured debt is debt that does not have any collateral pledged to the creditor. In certain loans, such as mortgages and automobile loans, if payments are not made on time, the lender has the legal right to seize the debtor’s property.
An obligation to pay alimony is not suspended or halted by filing for bankruptcy. Whether a divorce decree-determined duty is dischargeable depends on whether it is classified as support or property settlement.
In many cases, obligations for property settlement may be canceled in bankruptcy, but alimony payments can’t. Whether an obligation is a support or property settlement obligation is made by federal bankruptcy legislation rather than state law.
How does debt affect alimony?
A judge will consider numerous factors when determining whether or not to award alimony, including the paying party’s financial situation.
In certain circumstances, a judge will demand one spouse to reimburse the debts of the other as alimony. In other situations, a judge will forgo ordering alimony if the paying spouse would incur greater debt paying alimony.
If you’re receiving alimony, you must reveal how much money you receive each month. Take the last six months of receipts and calculate the average monthly amount if your payments fluctuate.
Means test and alimony
The means test is based on your income, which alimony payments may impact. Alimony obligations aren’t discharged in bankruptcy. The automatic stay, however, might influence a debtor’s obligation to pay alimony during a pending bankruptcy case. Filing for bankruptcy may also impact any changes to alimony terms.
In any case, there are a few exceptions to the application of the automatic stay. One such exception is alimony claims in court. As a result, the automatic stay will not prevent the commencement or extension of a legal action related to alimony payments in civil or family court as long as it does not involve the non-filing spouse seeking to distribute property that is part of the bankruptcy estate.
If a debtor’s income is being withheld as the consequence of an administrative or judicial order for family support duties, it will continue even if he or she files for bankruptcy. Wage garnishments will not be stopped by the automatic stay in this instance.
FAQ
What debts are not dischargeable in Chapter 13?
The following debts are not discharged in a chapter 13 bankruptcy:
- A home purchase or mortgage is one of the most important long-term financial commitments you’ll make.
- Certain debts for alimony or child support, income taxes that have been assessed within the 3 years before your bankruptcy filing, government-funded or guaranteed educational loans, and benefit overpayments are not dischargeable.
- Personal expenses resulting from death or personal injury caused by a driver who was intoxicated
Can you go to jail for not paying alimony in Michigan?
Failure to pay spousal support may result in a host of penalties, including civil and/or criminal ones. A person can be charged with a felony in Michigan and face up to four years in prison if they do not pay alimony on time or in the amount set by the court.
Spousal support is not always given in a divorce case, according to Michigan divorce law. If one spouse asks for spousal support and the couple cannot agree on assets or property division, the court must rule on whether spousal support is required.