Good Reason to File Bankruptcy Now: To Permanently Write Off Non-Support Debts Owed to Your Ex-Spouse

No kind of bankruptcy will write off support debts. Chapter 7 straight bankruptcy won’t write off NON-support debts. Chapter 13 will.

 

Treatment of Support Debts vs. Non-Support Debts

In a blog post here last month we made clear that bankruptcy does NOT write off past due child or spousal support. Nor can it change the amount of ongoing support you must pay—only the divorce court has the power to do that.

But there are other obligations found in divorce decrees that don’t relate to child or spousal support.

Those non-support obligations CAN’T be written off (“discharged”) in a Chapter 7 “straight bankruptcy” case. Section 523(a)(15) of the Bankruptcy Code says that a discharge under Chapter 7  “does not discharge an individual debtor from any debt—

to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) [support debts] that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit”

However, non-support obligations CAN be discharged in a Chapter 13 “adjustment of debts” case.  Section 1328(a) says that “the court shall grant the debtor a discharge all debts provided for by the plan,” and then lists a number of exceptions. That list of exceptions DOES include support debts (Section 523(a)(5)), but does NOT include non-support ones (the above Section 523(a)(15)).

Non-Support Divorce Debt

So what are these non-support obligations that can only be discharged under Chapter 13?

They tend to be obligations in your divorce decree related to the division of property and the division of debts (which is effectively negative property). These debts are often called property settlement debts.

The non-support debts that relate to the division of property were intended by your divorce judge to equalize unequal divisions of marital property. So if in your divorce your ex-spouse received less than you did (because his or her vehicle was worth less than the one you received, for example), the decree would likely have required you to pay your ex-spouse to make up for the difference.

The non-support debts that relate to the division of debts were intended by your divorce judge to make you pay for certain marital debts, so that your ex-spouse would not have to do so.

If you owe your ex-spouse because of such unequal divisions of marital property or because of your obligation to pay marital debts, Chapter 13 could discharge these types of obligations.

So if you owe a large amount of non-support obligations to your ex-spouse, you should seriously consider filing a Chapter 13 case. 

 

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