Reviewed by Itamar Levy, Esq.
Key Takeaways
- Alimony cannot be discharged in any chapter of bankruptcy.
- Your payments do not pause during the case. Wage withholding continues.
- Property settlements are different. Chapter 13 can erase an equalization payment while your alimony survives.
- What the judgment calls an obligation does not decide how bankruptcy treats it.
If you are the financially dependent spouse in your relationship, alimony is a post-divorce financial obligation that may allow you to receive regular payments to maintain the standard of living you established in your marriage. Although this is not a permanent financial agreement, you may be wondering how you will be affected if your former spouse files for bankruptcy during this time. Find out if your former spouse will be required to continue payments if they go bankrupt and how a proficient Long Island alimony lawyer at Barrows Levy PLLC can help you protect your alimony agreement.
Will My Former Spouse Continue Making Alimony Payments if They File for Bankruptcy?
Your former spouse filing for bankruptcy does not necessarily mean that you will stop receiving alimony. This is because there are two types of debts considered when they file for bankruptcy. First, dischargeable debt, like credit card debt, will most likely be wiped out. Second, non-dischargeable debt will most likely remain and be required to be paid off. Domestic support obligations, such as alimony, fall under non-dischargeable debt.
With that being said, alimony debts will not be dischargeable when filing for Chapter 7 bankruptcy. And when filing for Chapter 13 bankruptcy, alimony will be considered a priority debt, which will be included in the monthly payment plan, and paid throughout and after the bankruptcy proceedings.
Do My Payments Stop While the Bankruptcy Is Pending?
No. When you file for bankruptcy, you are granted an automatic stay that stops most types of collections, including wage garnishments, lawsuits, and foreclosures. However, 11 U.S.C. § 362(b)(2) explicitly excludes domestic support obligations from this list. Wage withholding for alimony payments continues, tax refunds may be intercepted to cover child support, and you can still go to court to establish a support order.
One matter that is covered by the automatic stay is the property division. This is because marital assets may be part of the bankruptcy estate, so pending distribution may need to wait.
Is Everything From My Divorce Judgment Protected?
Not necessarily. Generally, a divorce judgment contains two types of monetary obligations: alimony and property-related obligations, like distributive awards or equalization payments. Alimony payments are protected under every bankruptcy chapter.
However, the second kind of debt falls under 11 U.S.C. § 523(a)(15), which makes it ineligible for discharge during Chapter 7 bankruptcy, but eligible for discharge during Chapter 13. Due to the nature of Chapter 13 bankruptcy, it may wipe out an equalization payment owed to you while leaving your alimony entirely intact.
What the judgment calls an obligation does not settle the question either. Bankruptcy courts apply a functional test, looking at what the payment was actually meant to do rather than the label attached to it. An obligation described as a property settlement can be treated as support and survive, and the reverse is also true.
Can My Former Spouse Modify Their Alimony Payments During Their Bankruptcy?
Even though your former spouse will have to continue their alimony payments during their bankruptcy, they may still have the opportunity to petition for a modification of their support obligation.
For example, if your former spouse’s financial hardship is related to the loss of a job due to no fault of their own or otherwise earning less money than at the time the agreement was reached, they may request a post-judgment modification to their alimony payments to better reflect their current financial status. The same goes in the event that they develop a serious medical condition that comes with serious medical bills. On the other hand, modifying this agreement is not doable if their unemployment is due to them quitting or being fired for negligence or criminal misbehavior.
It is important to note that the change in your financial situation will be considered in the post-judgment modification request. That is, if you come into an inheritance or otherwise become financially independent, this may support your former spouse’s request to reduce or eliminate their alimony payments altogether. Remarriage is a separate matter and does not merely support such a request. Under Domestic Relations Law § 236(B)(1)(a), an award of maintenance terminates upon the payee’s valid or invalid marriage, so if you remarry, your alimony ends rather than becoming vulnerable to reduction.
If you have any further questions regarding the status of your alimony payments, do not hesitate to reach out to one of the talented divorce attorneys in Long Island today.
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If you need a Long Island lawyer who has significant experience handling family and estate planning matters, contact Barrows Levy PLLC to schedule a consultation with one of our experienced attorneys today.
