Bankruptcy never wipes out alimony or child support, and since 2005 it can erase a divorce’s property-division debts only in Chapter 13.
Support Versus Property
Under the Bankruptcy Code as amended in 2005, a debt in the nature of alimony, maintenance, or support is not discharged under any chapter, 11 U.S.C. 523(a)(5). Other divorce obligations, such as some hold-harmless agreements on credit cards, survive a discharge under Chapter 7, 11 or 12, 11 U.S.C. 523(a)(15), but can be discharged in Chapter 13, 11 U.S.C. 1328(a)(2).
The difference still matters in Chapter 13. In McGahee v. Rogers, 280 Ga. 750 (2006), decided under the law before 2005, a former husband who had assumed a tax debt and a car loan and promised to hold his former wife harmless, received a Chapter 7 discharge; today that debt would survive Chapter 7. Reversing a contempt finding, the Supreme Court held that “the parties’ original intent, not the subsequent results of a default, is the controlling factor.” With no alimony, no children together, a short marriage, and her admission that she needed no support, the debt allocation was “an element of the division of their marital property.”
Filing During the Divorce
If you file while your divorce is pending, list your divorce claims, because judicial estoppel can bar a claim hidden from a bankruptcy court. In Benton v. Benton, 280 Ga. 468 (2006), a wife in Chapter 7 listed her divorce suit but checked “None” for alimony, support, and property settlements she “is or may be entitled” to. Assuming that was an omission, the Supreme Court still affirmed the denial of her husband’s partial summary judgment motion against those claims: she had disclosed the suit and reopened her bankruptcy to amend the schedule, and courts “should be hesitant to apply federal judicial estoppel to defeat the important rights of a spouse to potential support and an equitable share of marital property.”
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This post is a quick overview of the law and is not intended as legal advice. Please feel free to contact our office for a consultation if you have questions about this or any other legal aspects regarding your case!