When Relationships Go Bankrupt, the Obligations Do Not

Few things are as certain in life as the reality that divorces are not only emotionally draining, but financially exhausting as well. Similarly, few couples make it through a divorce without some financial hardships. Even if just a minor reduction in credit score or the loss of equity in a vehicle, divorce hurts the wallet. For this reason, it is no surprise that many divorcees ask their divorce lawyers how they might use bankruptcy to either reduce or eliminate support obligations. Ultimately, however, this is not possible.

Under the U.S. Bankruptcy Code (11 U.S.C. 523(a)(5) and 11 U.S.C. 101(14A)), “domestic obligations” cannot be discharged in a bankruptcy. Of course, this makes sense. If you were not getting divorced, to the extent you are able, you would naturally be expected to provide food and shelter to your children and spouse. Although your debts might be fair game for discharge, the government does not see your family as a debt. Naturally, however, as with all matters of law, there are limited exceptions. There really is no way out of child support. If they are your children, you support them. Disputes over the amount of support should be taken to the divorce court where the final judgment was rendered.

You can discharge property settlement in Chapter 13 Bankruptcy

Few family law lawyers know this, but an lawyer who practices bankruptcy as well as family law, like the lawyers at Goodblatt · Leo, knows that property settlement obligations are dischargeable in Chapter 13 bankruptcy.

For example, in your divorce, if you are ordered to pay the Visa credit card, once you file and complete a Chapter 13 bankruptcy, that debt may be written off (discharged).

When your divorce lawyer is settling or trying your case, he/she should keep this in mind. Strategically, it may benefit a spouse to assume debts and then file Chapter 13. On the other hand, your lawyer should be aware this could happen to you and draft provisions to protect you.

In short, if you have divorce-related obligations and are suffering severe financial hardship, you should contact Orlando divorce lawyer Amy E. Goodblatt, who understands the interplay between bankruptcy and divorce. She can strategically guide you to maximize the benefits in both areas of law.