How Will Filing for Bankruptcy Affect My Spousal Support Payments?

 Posted on March 16, 2015 in Spousal Maintenance

If you are currently making spousal support payments, filing for bankruptcy does not terminate your obligation. Unlike credit card debt and mortgage payments, which may be put on hold or eliminated completely through bankruptcy, your responsibility to provide for your former spouse and your children remains in place regardless of your financial circumstances.

However, you may be able to have your required payment amount reduced to accommodate your altered means. If you need to have your alimony requirement altered, speak with a trusted divorce attorney about how to complete the modification process.

Filing for Bankruptcy with an Alimony Requirement

If your personal debt reaches the point where it is so great that you can not meet your repayment obligations, you may be able to file for bankruptcy. Individuals with outstanding personal debt are eligible to file for two types of bankruptcy: Chapter 7 and Chapter 13.

To qualify for Chapter 7 bankruptcy, an individual must prove that he or she has no disposable income to put toward his or her debt. This is determined through the means test, a series of questions that determine an individual's living costs. If an individual makes less money than his or her state's median annual income, he or she automatically passes the means test and may file for Chapter 7 bankruptcy.

When an individual files for Chapter 7 bankruptcy, his or her case is assigned to a court trustee who then liquidates all of his or her non-exempt property and uses the profit to repay the individual's creditors. The individual's wages may be garnished to meet his or her former spouse's alimony needs in this type of case.

With Chapter 13 bankruptcy, the individual does not have his or her personal property liquidated for a profit. Instead, he or she works with a court-ordered trustee to develop a repayment plan. When a filing individual also has spousal support obligations, these obligations may be included in the repayment plan.

Bankruptcy and Automatic Stays during Divorce Proceedings

If you file for bankruptcy while you are working through the divorce process, you may be granted an automatic stay. This stops all collection attempts from your creditors until the divorce process is complete and, if your divorce requires the division of marital property between yourself and your spouse, can make this process more difficult.

An automatic stay does not halt proceedings related to child support, child custody, or spousal support. It may only have an effect on the property in your bankruptcy estate, which is the personal property that the court may liquidate as part of a Chapter 7 bankruptcy repayment plan.

Divorce Attorneys in DuPage County

Filing for divorce and filing for bankruptcy both change your life in monumental ways. If you are considering filing for bankruptcy and want to learn more about how it will affect your current child or spousal support payments, as well as other areas of your financial life, contact Davi Law Group, LLC to discuss your case with one of our firm's experienced DuPage County divorce attorneys.