How is Family Support Treated in a Personal Bankruptcy?

In the West Palm Beach area and throughout the state of Florida, consumers can be required to pay family support (child support or alimony), or can be awarded family support (child support or alimony) in a family law case. While it is important to remember that bankruptcy law is separate from family law in Florida, there are some overlapping issues when a debtor who receives or is required to pay family support files for bankruptcy. How is family support treated in a personal bankruptcy case? It will depend on the specific type of support and whether the debtor is required to pay or be paid a particular amount of family support. Our West Palm Beach bankruptcy lawyers can tell you more.

Understanding the Domestic Support Obligation and the Bankruptcy Code 

The US Bankruptcy Code specifically addresses required payments or debts known as part of a “domestic support obligation.” A domestic support obligation can include child support, as well as alimony or spousal support. The Bankruptcy Code’s “exceptions to discharge” specifically include debts owed “for a domestic support obligation.” Under Section 523(a)(5), domestic support obligations are non-dischargeable.

In other words, if a child, parent, or ex-spouse is owed a domestic support obligation (by you), then that debt cannot be discharged in a bankruptcy case in Florida (or in any other state). Child support and alimony, or any kind of “family support,” is a type of non-dischargeable debt. Accordingly, any child support or alimony you owe will survive your bankruptcy case, and these debts will not be discharged.

Exemptions and Family Support 

What about in circumstances where a debtor holds the majority of the parental responsibilities for a child or children and receives child support, or where the debtor receives alimony from an ex-spouse as part of a divorce settlement? In other words, will these types of family support be exempt in a bankruptcy case, or can the debtor be at risk of losing these assets in a Chapter 7 bankruptcy case, for example?

In general, a debtor who receives a type of family support, or a type of domestic support, can generally exempt these assets as long as they are reasonably necessary for the support of the debtor and/or the debtor’s dependents. For many debtors, this means child support or alimony will be exempt. There are, of course, some circumstances in which this will not be the case, and it is essential to understand how the specific facts of your case will be viewed by a bankruptcy court. If you are in this situation and have any questions or concerns, it is important to seek legal advice.

Contact Our West Palm Beach Bankruptcy Attorneys Today 

Many types of debts are dischargeable in personal bankruptcy cases, and many assets are classified as “exempt” under Florida law. However, there are certain types of non-dischargeable debts, including forms of family support. Whether you have questions about how your domestic support obligation will be treated in your bankruptcy case, or you need help understanding whether you will be able to keep your alimony or child support payments in a bankruptcy case, an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller can assist you. Contact us today for more information.

Sources:

law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=11-USC-185708367-259222644&term_occur=1&term_src=title:11:chapter:1:section:101

law.cornell.edu/uscode/text/11/523