The
protections given by filing bankruptcy have been changed due to the new
bankruptcy law of 2005. Under the new bankruptcy law, mainly all the payment
obligations received in a family court decree combine to be called “Domestic
Support Obligations”. Which include child support, alimony, payments on debts
ordered to be paid in a family court decree, and so on. I refer to these
throughout as “DSO’s”.
When a chapter 7 bankruptcy is filed most DSO’s can't be discharged. Sometimes
they can though. This is why you need an experienced bankruptcy attorney like
Mr. Hardy. Know the concept of DSO’s versus normal debts and how they're
created: a DSO is an obligation to your spouse/parent of your child, not the
bank. So, you can file bankruptcy and have the obligation to the BANK
discharged in order to pay the family VISA card. BUT sometimes you can get out
of both debts.
However, if a family court says you have to pay the VISA and holds your spouse
harmless for that payment, then the family court created a new obligation: an
obligation to your spouse for you to pay that VISA bill. When you file a
chapter 7 bankruptcy it'll discharge the obligation to the bank so you can pay
the VISA bill, but it might not discharge the DSO to your spouse to pay that
bill. A chapter 13 will, in many circumstances ALLOW the discharge of this type
of DSO, but no other DSO’s.
A child support or alimony DSO isn't dischargeable in any bankruptcy. Whatever
penalties your spouse obtains against you prior to filing bankruptcy in the
family court for not paying, will be there after you file chapter 7 or 13
bankruptcy. However, at times Mr. Hardy can mitigate the effect of contempt
proceedings for failure to pay; AND, work out repayment plans for such
obligations in the Chapter 13 bankruptcy.
If a Chapter 13 bankruptcy is filed you can pay alimony and child support DSO’s
in your Chapter 13 bankruptcy plan.
If
you are in arrears for child support or alimony payments to your spouse, then a
Chapter 13 can require your spouse and the family law court to accept a pay
back schedule through your Chapter 13 bankruptcy payment plan. This can stop further
contempt proceedings against you in the family law court, but only if you make
all your Chapter 13 bankruptcy plan payments and future DSO obligations.
After filing bankruptcy the automatic stay may delay but cannot always stop or
prevent an eventual family court hearing regarding DSO’s. So, if you are held
in contempt of a family court by your spouse for owing past child support, you
can file bankruptcy and could pay the arrearage in a chapter 13 bankruptcy
plan, but it may not stop hearings set to be held in the family court when the
spouse’s attorney requests permission from the bankruptcy court to proceed with
the DSO case. Usually, the hearings are delayed and Mr. Hardy, the debtor and
the spouse (ex-spouse) and their attorney work out a settlement or other
scheduling arrangement. Mr. Hardy charges fees for negotiating in family law
cases that are separate from the fees for a bankruptcy.
Similarly, filing bankruptcy won't prevent family court from hearing an action
to gain a divorce or deal with issues in custody or child support. This is
different from the protection given by filing bankruptcy with regards to most
other lawsuits. In those cases, the lawsuit or hearing can't be held without
the party wanting to have the hearing receiving permission first from the
bankruptcy judge.
Finally, keep in mind, if you're getting divorced and both parties are broke
and it's certain that neither of you are able to pay your bills after divorce,
then filing chapter 7 bankruptcy before you get a divorce may be the best solution
to your financial issues.
