Recovering from Financial Ruin

Recovering from Financial Ruin

Discharging Alimony During Bankruptcy

by Veeti Lepisto

If you are unable to pay your debts, then bankruptcy allows you to discharge them so that you can start a fresh financial journey. As with other legal processes, however, there are exceptions to this rule. There are some debts that you cannot discharge, and alimony (spousal support after divorce) is one of them.

Whether you are filing for Chapter 7 or Chapter 13 bankruptcies, you will have to continue servicing your alimony payments. So if you were thinking of bankruptcy as a way out of these obligations, then you should start thinking of alternative solutions. Don't forget that the consequences of not paying alimony can be dire; you can be held in contempt of court, your income can be withheld, and portions of your financial accounts can be seized.

How Filing for Bankruptcy Can Help

  • Alimony- related payments: Although bankruptcy cannot help you to avoid making alimony payments, it can help you with some alimony-related payments. This is because only alimony per se is non-dischargeable, other related payments, such as interest or late fee payments, are not.

Therefore, a bankruptcy discharge can still help you if you have not been paying alimony for a long time and have accrued a significant amount of interest. The discharge may get rid of the accrued interest so that you only concentrate on paying the principal amount, which is the real alimony.

  • Misclassified alimony – You may be able to discharge part of the "alimony" debt if it wasn't really spousal support, but some form of marital obligation misclassified as alimony. For example, some divorcing persons have a tendency of classifying part of their divorce settlement as alimony. If you can prove that this is what happened during your divorce, then you may succeed in having this part of the debt discharged.
  • Modification of Payments – Filing for bankruptcy may also lead to a modification of the alimony payments. This is possible if the discharge significantly affects your ability to pay the alimony. The debt is not discharged, but it may be reduced according to your ability to pay.
  • Assigned alimony – you may also be able to discharge the alimony debt it has been assigned to a third party. This may be the case if you have been having difficulties paying your spousal support, and your former spouse has assigned another person to collect the money on his or her behalf. In such a case, it is as if you owe money to the third person, and not your spouse, which is why you may be able to have them discharged.

This brief discussion of the relationship between alimony and bankruptcy shows just how complicated these issues can be. It is advisable to consult an attorney, such as Legal Clinic Of Jerry Paeth, early on so that you don't make any move before ascertaining that it will help you meet your objectives. For example, an attorney may help you decide on which bankruptcy chapter to choose if you have debts related to marital obligations.


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About Me

Recovering from Financial Ruin

Several years ago, one of my best friends married the guy of her dreams. This tall, quiet man adored my friend. Almost every week during their courtship, he presented her with a beautiful, fragrant arrangement of flowers. At the time, my friend’s mom joked that her home resembled a funeral home because of all of the flowers her boyfriend sent her. After the happy pair married, they purchased a new home together and quickly began running out of money, meaning that he could no longer afford to give her the flowers she loved. They even discovered they couldn’t afford to pay the monthly mortgage. After only a few years of marriage, they filed for bankruptcy. On this blog, you will discover the ways a reputable bankruptcy attorney can help you successfully recover from financial ruin.