Your Bankruptcy Options When You Owe Money to an Ex-Spouse

Should You Choose Chapter 7 or Chapter 13?

Your Bankruptcy Options When You Owe Money to an Ex-SpouseAre you struggling to meet your financial obligations? Do your debts include family law obligations, such as child support or alimony arrearages? Have you considered be discharging or restructuring those debts could in a Chapter 7 or Chapter 13 proceeding?

Domestic Support Obligations Are Not Dischargeable under Chapter 7

Pursuant to Section 507(a)(1) of the federal bankruptcy code, child support and alimony have first priority in a bankruptcy proceeding, payable only after administrative costs of the bankruptcy. Additionally, Section 523(a)(5) of the bankruptcy law states that a domestic support order is not dischargeable in a Chapter 7 petition. There are no exceptions.

Domestic Support Obligations May Be Restructured under Chapter 13

Child support and alimony obligations also receive priority in Chapter 13 bankruptcy filings. However, if you want to reorganize domestic support arrearages in a Chapter 13 petition, you must pay all back support during the three-to-five year period of the bankruptcy. You also must stay current on any ongoing support obligations during the bankruptcy period. Failure to do so will likely lead to the termination of your Chapter 13 petition. In addition, if your Chapter 13 reorganization has not been approved, and you get behind on child support or alimony, you risk denial of confirmation of your plan, conversion to a Chapter 7, or dismissal of your case.

It is important to understand that any amounts due as part of a property settlement in a divorce case are not considered to be domestic support obligations as defined by the bankruptcy law. As such, property debts may be discharged in a Chapter 13 filing. You will be required to make payments during the length of the Chapter 13 bankruptcy, but any amounts still due will be discharged at the end of the Chapter 13. You cannot discharge property settlement debts outright in a Chapter 7 petition

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.

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Call Rockwall bankruptcy lawyer Carrie Weir at 972-772-3083 or fill out the contact from below for a free, confidential consultation to discuss your options.

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