Domestic Support Debts in Sacramento Bankruptcy
Section 523(a)(5) of the bankruptcy code excepts “domestic support obligations” from discharge in chapter 7 and chapter 13 bankruptcy. The definition of “domestic support obligation” is quite expansive. Section 101(14A) of the bankruptcy code defines a domestic support obligation as a debt owed to a current spouse, ex-spouse, child of the debtor, or the child’s parent, legal guardian, or responsible relative, or a governmental unit; in the nature of alimony, maintenance, or support (including government assistance); established by a separation agreement, divorce decree, property settlement agreement, court order, or governmental unit’s determination; and not assigned to a nongovernmental entity unless voluntarily assigned by the recipient for collection. As indicated above, the expansive definition even includes support debts owed to a governmental unit for government assistance given to the debtor’s family for which the debtor is liable according to a governmental unit’s determination in accordance with non-bankruptcy law.
Chapter 13 & Nonsupport Debts
In addition to the nondischargeability of domestic support obligations, nonsupport debts owed to a current or former spouse and incurred through a divorce, separation agreement, or divorce decree are likewise nondischargeable. However, these nonsupport debts listed in § 523(a)(15) can be discharged in Chapter 13 upon full completion of the plan. Therefore, whether a domestic debt is in the nature of support will determine whether the debt is dischargeable in Chapter 13 bankruptcy.
In the Nature of Support
If a domestic debt is in the nature of support it will be considered a nondischargeable domestic support obligation. Whether a domestic debt is in the nature of support requires the consideration of several factors. To begin, the court will not accept the parties classification of the debt in a separation agreement at face value. Rather, the court will look past the parties classification of the debt to evaluate whether the debt is in the nature of support. In doing so the court will evaluate whether the parties intended at the time of the separation agreement for the debt to be for support purposes. If the parties intended for the debt to be for support the court will classify the debt as a domestic support debt in bankruptcy. However, the opposite conclusion, that the parties did not intend the debt to be for support, will not automatically trigger the conclusion that the debt is a nonsupport obligation. The court will also look at the creditor spouse’s need for support at the time of separation. If there is an imbalance of wealth at the time of separation an agreement to compensate the non-wealthy spouse will likely be in the nature of support and therefore a domestic support obligation nondischargeable in both chapter 7 and 13 bankruptcy.
Is Your Domestic Support Dischargeable in Bankruptcy?
Most domestic support obligations are not dischargeable in bankruptcy. However, there are situations in which a payment obligation may be dischargeable. To gain more clarity on whether your payment obligation is dischargeable contact a local bankruptcy attorney for a free consultation. Sacramento Law Group LLP represents clients with domestic support obligations from Redding to Stockton. To learn more about filing bankruptcy call Sacramento Law Group LLP at (916) 596-1018.