Paying Alimony If You Go Bankrupt

Are alimony debt and payments dischargeable in bankruptcy?

Alimony is when one spouse pays money to another to help support that spouse after a divorce. Usually this type of support is ordered by the divorce court when one spouse did not work or worked very little and the other spouse made the bulk of the household income. Usually, alimony is paid for a set period of time in order for the “stay at home” spouse to have time to get employment.

When a spouse files for bankruptcy the court will issue an automatic stay on any type of collection efforts by creditors. However, this does not apply to domestic support claims such as the other spouse filing for divorce, alimony or child support. Past due alimony debt and ongoing, future alimony payments are not dischargeable in bankruptcy, as per Section 523(a)(5) of the Federal Bankruptcy Code.

Although alimony debt and payments cannot be discharged or wiped clean in a bankruptcy, the amount paid can be changed under certain scenarios. A bankruptcy judge may change the amount paid by the supporting spouse when the supported spouse, for whatever reason, is no longer responsible for the payment of the debts in the marriage. If the supporting spouse has to take on those debts, then the judge may lower the payments. Another scenario is when, due to the bankruptcy, the supporting spouse lacks the ability to pay the alimony given their current economic situation.

The Long Term Effect of Bankruptcy on Alimony

Bankruptcy does not discharge alimony obligations. However, the automatic stay may influence a person’s obligation to pay alimony during a pending bankruptcy. Filing for bankruptcy may also influence any modifications to alimony obligations.

In any case, there are certain exceptions to the application of the automatic stay. Legal actions involving alimony payments are one of those exceptions. So long as the legal proceeding does not involve the non-filing spouse seeking to distribute property that is considered to be part of the bankruptcy estate, the automatic stay will not prohibit the commencement or continuation of such a case in civil or domestic relations court.

If a debtor’s income is being withheld for family support obligations as the result of an administrative or judicial order, the withholding will continue even after a bankruptcy is filed. The automatic stay will not be applied to stop wage garnishments for the purpose of family support obligations.

Conclusion

If you receive alimony, you must list the amount on Schedule I and on Form 122A of your petition. If you pay alimony, you must list it on your Schedule J.

The automatic stay may affect your obligation to pay alimony during a pending bankruptcy, but not necessarily so. Any wage garnishments for the purpose of alimony will continue even after a bankruptcy case is filed. Legal proceedings involving alimony obligation matters, in most cases, are an exception to the automatic stay.