If you are divorced or recently separated from your spouse you may be wondering if the debts resulting from the judgments in your divorce can be discharged in a bankruptcy. As you weigh your bankruptcy options it is important to bear in mind that the judgments and agreements established in a divorce create the future rights and responsibilities for each spouse, and for the children of the marriage. Unfortunately, bankruptcy law in New York is heavily restricted in its ability to alter or discharge the debts established by divorce judgments and agreements.
Both alimony and child support payments are given total protection and must be paid as agreed upon in both chapter 7 and 13 bankruptcies. These continuous financial responsibilities established in the divorce are not affected by a bankruptcy. Furthermore, unlike other debts you may be discharging these payments are not subject to the “automatic stay” that forbids collections during open bankruptcy cases. However, since child support is under the jurisdiction of New York’s probate courts, it is sometimes possible to file a motion potentially modifying future payments if the current payments are shown to be impossibly high for the paying spouse. Alimony payments are even more difficult to adjust than child support debt, as alimony agreements often carry on as independent contracts outside the divorce agreement itself often making them immune to bankruptcy.
But, beyond alimony and child support, in many divorce agreements one spouse will be required to take responsibility for debt incurred by the other spouse. This debt also is not usually discharged in a bankruptcy, but can be in some cases depending on the particular bankruptcy filing, case specifics and ruling of the Bankruptcy Court.
For example, when dividing marital property, if one spouse is ordered to compensate the other spouse for the property this financial obligation established by the divorce may not be affected by a chapter 7 filing, but could be altered or discharged under a chapter 13 filing. In a chapter 13 filing a property settlement judgment or agreement are subject to a chapter 13 Plan that can reduce or even eliminate property settlement debt. Filing chapter 13 by definition allows this obligation to be adjusted in a 3 to 5 year plan that is based upon the owing spouse’s ability to pay. By the end of the 3 to 5 year chapter 13 plan, remaining balances on property settlements are discharged along with almost all other unsecured debt.
So, while some obligations from a divorce like child support and alimony will remain typically unaffected by any bankruptcy, other debt obligations can be altered depending on specifics and filing status. Generally speaking, filing chapter 7 will typically have no affect on the debts of a divorce, while filing chapter 13 on the other hand can provide some modification or elimination of property settlement debt through a defined chapter 13 plan.
To really understand the options you need an experienced attorney familiar with how divorce agreements and judgments will affect a bankruptcy filing, and what particular debts can be discharged, reduced or eliminated.
Please contact my office today to better understand the bankruptcy options available to you based upon the specifics and prevailing obligations of your divorce. We specialize in bankruptcy law and understand the unique aspects divorce agreements bring to bankruptcy proceedings in New York. Having the experienced team familiar with the intricacies of divorce judgments can make all the difference in your bankruptcy.
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If you live in New York and are interested in a free bankruptcy consultation please call 212-244-2882. The Law Office of William Waldner only practices Bankruptcy Law and is always here to help.
This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.