It is common knowledge that filing for bankruptcy in PA discharges debt; what is lesser known is that not all debt is dischargeable. This blog will discuss which family law related debts are not dischargeable and how specific chapters of bankruptcy affects discharge as well.
What about the terms of a Marriage Settlement Agreement (MSA)? If a spouse files for bankruptcy subsequent to the execution of an MSA, can the innocent spouse still enforce the Agreement? The answer is contingent upon which chapter of bankruptcy was filed. Filing under Chapter 7 will not discharge divorce settlement obligations, but filing under Chapter 13 can.
One debt that is never dischargeable, no matter which chapter of bankruptcy is filed, is a domestic support obligation. This means that an obligor cannot escape their liability to pay child or spousal support despite filing for bankruptcy. Although filing for bankruptcy may permit an obligor to cease alimony payments or payment of child support arrearages temporarily, it does not eliminate the debt. Further, the bankrupt party is still responsible for paying future support obligations as they become due.
In summary there are 2 things to consider when determining if a family law related debt is dischargeable: 1.) was bankruptcy filed under chapter 7 or chapter 13; and 2.) are the payments in the nature of support.
If you have questions regarding how your bankruptcy or ex spouses banckruptcy claim may affect the terms of your Marriage Settlement Agreement, contact us today to speak with an experienced family law attorney!