If a child support or alimony payment is considered to be a 'domestic support obligation," it cannot be discharged in bankruptcy. However, if it is deemed to be another type of marital property, it may be discharged in Chapter 7 or 13 bankruptcy. Furthermore, certain assets included in the property settlement portion of a divorce may be discharged in a Chapter 13 case.
This may be true if there is a hold harmless provision or cash is used to make a person whole in a divorce. For instance, instead of selling a home and splitting the proceeds, one person gets his or her portion of the equity in cash, and the other individual gets to keep the home. Even if a debt cannot be discharged in a bankruptcy, it may be easier to manage under a Chapter 13 repayment plan. The bankruptcy court will determine which debts hold the highest priority, and they will be repaid first.
Generally, alimony or child support payments will be made in full under the plan. If an individual has anything left after accounting for his or her basic needs, other creditors will divide that money up among themselves. The repayment periods will last for either three or five years, and any non-priority debt balances will likely be discharged when it comes to an end.
Failing to make alimony or child support payments could result in a variety of penalties, including jail time. Those who are struggling to make their payments may seek counsel from an attorney. The same is true of individuals who are seeking back alimony or child support payments. An attorney may be able to help a noncustodial parent seek a compromise resolution or help a custodial parent obtain the financial support to which he or she may be entitled.