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How Bankruptcy Affects Alimony and Child Support

According to the American Bankruptcy Institute, consumer bankruptcy filings for the first half of 2010 reached the highest level since 2005, when the new bankruptcy laws went into effect to stem the tide of filings five years ago.

Overall, consumer bankruptcies are up 14 percent for the first six months of 2010. In Arizona, bankruptcy filings were up 34 percent in the first quarter of 2010 compared with the same period one year ago.

Many of these bankruptcy fillings include divorced spouses who are paying and/or receiving spousal support, child support or both. As a Phoenix divorce attorney, I have had many inquiries from divorced couples wondering how bankruptcy will affect support payments.

Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, child support and spousal support are not dischargeable in bankruptcy. Whether a paying spouse has filed for Chapter 7 bankruptcy or Chapter 13 bankruptcy, they still must meet their support obligations under the law.

In fact, the nonpaying spouse is first in line of creditors to be paid – no other creditor can be paid anything until the support obligations are met. If a nonpaying spouse is owed back support, they must file a proof of claim with the bankruptcy court to receive payment. In addition, the bankruptcy trustee involved in the paying spouse’s case must keep the nonpaying spouse apprised of the bankruptcy proceedings.

Chances are if a paying spouse has filed for bankruptcy, he or she is already behind in support payments. The paying spouse may try to obtain a modification of support order to reduce the amount paid for child support or spousal support, or both. To do this, the paying spouse must go to court and the nonpaying spouse will be notified. Be sure to consult with your divorce attorney about what you can do to protect your interests.

If a nonpaying spouse files for bankruptcy, creditors are not allowed to go after support payments for repayment of debts and those payments are not included as part of the nonpaying spouse’s bankruptcy estate.

Bottom line: filing for bankruptcy will not eliminate an obligation to pay child support or alimony. If you are experiencing difficulty in either paying or receiving child support or alimony, contact your divorce attorney to discuss your options.

A former Deputy County Attorney for the Maricopa County Attorney’s Office in Arizona, Scott David Stewart is a Phoenix divorce lawyer and founder of Law Offices of Scott David Stewart, a Maricopa County family law firm with practice areas in divorce, adoption, child support, custody and visitation, juvenile law and domestic violence. For more information, visit http://www.SDSFamilyLaw.com.

How Bankruptcy Affects Alimony and Child Support
By Scott David Stewart

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