Kentucky Bankruptcy Law

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Domestic Support Obligations: child support, alimony, and equitable distributions

There are two different sorts of domestic support obligations defined in the bankruptcy code.  The first kind of domestic support obligation encompasses things such as child support payments and alimony (called maintenance in Kentucky).  The second sort comes from an equitable distribution of property subsequent to a divorce. The term “domestic support obligation” first appears in 11 USC Sect. 101(14A), but these two different kinds of domestic support obligations only become apparent when one looks at how they are treated in terms of discharge of debt.

At first glance at 11 USC 523(a)(5) & (15) it looks like these two types of domestic support obligations are treated the same. That is to say, neither child support and alimony type obligations nor equitable distribution of property appear to be discharged in bankruptcy. This is true when it comes to Chapter 7 liquidation type bankruptcy. However, it is a different story in Chapter 13, but one has to look at the bankruptcy code carefully to discern this difference.

So, now we have to turn to 11 USC Sect 1328(a)(2) to see the rest of the story. This oddly written statute basically says that all debts except for certain ones get discharged once all the plan payments are made. The specific provision mentioned includes 11 USC Sect 523(a)(5) as an exception that does NOT get discharged. However, that provision conspicuously leaves our 11 USC Sect. 523(a)(15). This latter provision, 523(a)(15) pertains to equitable distribution of assets subsequent to a divorce.  

Bottom line: if you agree to let you soon to be ex-spouse pay you later for your share of equity in the marital residence, then you may end up loosing out if he or she ends up in a Chapter 13. That chunk of equity may well end up being treated as a general unsecured debt receiving only pennies on the dollar. However, child support and alimony (maintenance) will not be discharged in a Chapter 7 or a Chapter 13.

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February 1, 2012 - Posted by | Uncategorized | , , , , , , , , ,

5 Comments »

  1. [...] implications of obligations owed by that ex-spouse to you.  I’ve written a post regarding domestic support obligations in Chapter 7 as compared to Chapter 13 bankruptcy and I encourage your to click over and read it [...]

    Pingback by Domestic Support Obligations and Bankruptcy « Bluegrass Family Law | February 1, 2012 | Reply

  2. This is why a lot of divorce attorneys will tell their clients to take on more debt instead of paying alimony. That is why the divorce attorney needs to understand the implications if a bankruptcy could be filed. Great information. Thanks

    Comment by Salt Lake City Divorce Lawyer | February 3, 2012 | Reply

  3. [...] equitable distributions as a result of divorce are treated in a Chapter 13. You can read that post here. In short, a domestic support obligation that arises from the distribution of property will be [...]

    Pingback by A Just Distribution of Property: Domestic support obligations « Bluegrass Family Law | February 8, 2012 | Reply

  4. […] implications of obligations owed by that ex-spouse to you.  I’ve written a post regarding domestic support obligations in Chapter 7 as compared to Chapter 13 bankruptcy and I encourage you to click over and read it […]

    Pingback by Things to be aware of when facing divorce and debt | Bluegrass Family Law | October 31, 2013 | Reply

  5. […] equitable distributions as a result of divorce are treated in a Chapter 13. You can read that post here. In short, a domestic support obligation that arises from the distribution of property will be […]

    Pingback by Dividing stuff up | Bluegrass Family Law | November 5, 2013 | Reply


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