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Filing for bankruptcy in Raleigh is a major decision with significant effects on your financial and personal affairs. It triggers the automatic stay, which goes a long way towards restoring your peace of mind. You receive more affordable payment plans and have certain debts eliminated altogether. For many people, it’s quite literally a new lease on life.
If you are going through a divorce, however, you may be wondering about what will happen to your spousal maintenance payment, aka alimony, after declaring bankruptcy.
“Will filing for bankruptcy discharge your alimony obligation, or will you have to continue paying?”
This is a question we get a lot here at Weik Law Office, and one we can help you navigate
Spousal Maintenance is a Non-Dischargeable Financial Obligation
In short, the general answer is no. In most cases, filing for bankruptcy in Raleigh, NC will not eliminate your alimony obligation.
According to Section 523 of the United States Bankruptcy Code (Title 11 of the United States Code):
“[a] discharge under Section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from “domestic support obligations.”
Such “domestic support obligations” includes debts that are owed to or recoverable by the debtor’s:
· spouse
· ex-spouse
· child by the legal guardian
· child’s parent
· responsible relative
Such debts include child support and maintenance, and typically arise from a property settlement agreement, separation agreement, or divorce decree.
Exceptions to the Section 523 Rule
Note that there are exceptions to Section 523, specifically these two situations:
· Exception 1:
First, if a divorce decree stipulates that you’re obliged to pay alimony to your spouse, but it’s not actually alimony. In that case, the obligation can be discharged in bankruptcy.
To illustrate, let’s say the divorce decree states that a spouse is to pay a marital debt to ABC Corporation, and it specifies that the debt payment shall be treated as “alimony.” In that case, the filing for bankruptcy in Raleigh can eliminate that “non-alimony” debt, despite the divorce decree mistakenly calling his debt payment as “alimony.
· Exception 2:
You can discharge this financial obligation through bankruptcy if a third party is involved in the arrangements for alimony. For instance, the alimony obligation may become dischargeable if the receiving spouse assigns their mother, father, guardian, or another relative to collect alimony on their behalf.
“Can I Escape Alimony by Filing for Bankruptcy?”
No, it’s not a good idea to file bankruptcy for the sole purpose of escaping your alimony payments.
Bankruptcy is a powerful legal tool designed to give people a fresh start. However, it doesn’t just protect debtors, but also those to whom the debtors owe domestic support obligations, unless your case falls under the exceptions.
Learn More About How Bankruptcy Can Benefit You
Finally, it’s important to know that bankruptcy cases are rarely clear cut.
At Weik Law, we understand you may be struggling with both your alimony payments and other insurmountable debts. A knowledgeable bankruptcy lawyer in Raleigh can help you make sense of your situation and plan your next steps.
Call Weik Law Office today at 919-845-7877 for a free consultation, and set up a time to speak with one of our friendly professionals.