Bankruptcy Judgment Does Not Grant Discharge of Alimony Obligation

Bankruptcy Child SupportUnfortunately, financial obligations tend to pile up quickly to the point where an individual is unable to keep up. The traditional approach to handing these obligations is to file for bankruptcy in order to get some of the debt discharged. There are some disadvantages to going bankrupt, such as the impact it has on an individual’s credit rating, or the fact that it will show up on a person’s credit report for years to follow. However, these disadvantages to filing might be outweighed by the advantages and relief that bankruptcy can bring about.

Benefits to Filing Bankruptcy

There are several benefits that can occur by filing for bankruptcy. By filing for bankruptcy, an individual who is behind on making mortgage payments can stop a foreclosure and instead try and set up a payment plan. Likewise, an individual who is behind on making car payments can stop repossession and either set up a payment plan or lower the amount of their payments by filing for bankruptcy.

Another big advantage to filing bankruptcy is the affect it can have on an individual’s credit card debt. A person filing for Chapter 7 bankruptcy can discharge their card payments or even lower the percentage of their credit card debt. Other types of benefits include: discharging medical debt, being rid of harassing calls from creditors, and stopping collections lawsuits, judgments or garnishments. The overall idea of filing for bankruptcy is to provide an individual with the ability to have a fresh start and to allow the person to get back on their feet.

Alimony and Child Support Remain After Bankruptcy

While some assets can be discharged by filing for bankruptcy, there are also some that are not included on the list of dischargeable assets. The general rule is that debt for a domestic support obligation cannot be discharged. A “domestic support obligation” is a debt that is owed to a spouse for support under a separation agreement. Child support and alimony (spousal support) for example, are some of the types of obligations that cannot be discharged by filing for bankruptcy. These types of obligations are made non-dischargeable by the Bankruptcy Code, having their own priority in the eyes of the courts.

Other Debts that Can’t be Discharged in Bankruptcy

Other types of debts that cannot be discharged are student loans such as federal student loans, private lender student loans, loans directly from the school and tuition assistance loans from school. Also, IRS liens which are attached to an individual’s house because of the failure to make income tax payments are also prohibited from being discharged. Any debts that are incurred for fines, penalties and restitution must also be paid by the individual.

Get Help from a Lawyer During Your Free Consultation

If you are faced with many financial obligations, including spousal support, and you are struggling with paying them, a Villani & DeLuca bankruptcy attorney can help you figure out if bankruptcy is right for you.  Alternatively, if you decide against filing for bankruptcy, one of our family law attorneys may be able to help out.  When you contact our firm, a lawyer will discuss your financial issues with you by phone or arrange an in-person consultation free of charge.  Call Villani & DeLuca at (732) 965-3350 today to speak with a New Jersey bankruptcy or divorce lawyer.