Can I Discharge Child Support or Domestic Support Obligations When I File Bankruptcy in Georgia?
In Georgia and in all other jurisdictions, neither a Chapter 7 nor a Chapter 13 bankruptcy will discharge domestic support payments of any kind, whether it’s alimony, spousal support or child support that is at issue. The same holds true for student loans, debts related to fraud or theft, or any form of criminal restitution. If you are trying to avoid these types of debt and obligations then bankruptcy is not an appropriate solution.
In addition to support payments, divorce proceedings usually produce what is known as a property settlement. In a property settlement, the marital property is divided between the two spouses. Marital property can include anything with exchangeable value including: money in bank accounts, personal items such as furniture, gifts purchased with marital funds, retirement plans (401K, pension, etc.), a business interest, or even a profession. Generally, it relates to property acquired during the life of the marriage and not property acquired before the marriage or inherited property. What most people don’t realize is that marital property also includes marital debts.
For example, if a married couple uses a joint credit card with American Express that carries a balance of $50,000, then the divorce settlement agreement, which states how the marital property will be divided, will address which party is responsible for paying off the debt. If, for example, under the settlement agreement, the husband is responsible for the entire $50,000, then the question becomes can he discharge the debt in the event that he files for bankruptcy, leaving the former spouse and joint accountholder responsible for the debt?
Under the 2005 Bankruptcy Code, support obligations are not discharged under either Chapter 7 or Chapter 13, and obligations that are part of a property settlement agreement (ie. the division of joint debts) may not be dischargeable either. Since the question of whether a property settlement obligation can be discharged is less clear cut than that of a true support obligation such as child support or alimony, the responsibility for consumer debt is often be deliberately characterized as a support obligation in the divorce settlement agreement in order to prevent the debt from being discharged in bankruptcy. If the debtor spouse lists the other party as a creditor and attempts to discharge the debt, the Court will examine the settlement agreement and also try to determine the parties’ intent at the time of the divorce to determine if the debt is subject to discharge.
If you are considering bankruptcy and have been involved in a divorce or are considering beginning divorce proceedings after a bankruptcy please consult a qualified bankruptcy attorney. For a free consultation, please contact Law Offices of Charles Clapp at (404) 585-0040.