Some Divorce Obligations Can Be Discharged in Chapter 13

Domestic support obligations such as alimony or child support are always nondischargeable. If you are assigned to pay a joint debt on behalf of your ex-spouse, say credit card debts, then you can discharge your obligation to pay the credit card company.

But your ex-spouse may still have a claim for reimbursement via the divorce decree if your ex-spouse ends up having to pay the credit card companies. That obligation to reimburse your ex-spouse cannot be discharged in a Chapter 7 but can be discharged in a Chapter 13.

Also property settlement orders as part of a divorce or dissolution decree can be discharged in a Chapter 13 but not in a Chapter 7.

Determining whether a obligation to pay is a support order or property settlement is not always clear but the difference determines what might be discharged in a Chapter 13 bankruptcy. The courts look at a variety of factors:

Labels: Although the bankruptcy court can look beyond the labels contained in a divorce decree, labels still matter. Labels count for something.

Needs of the Parties: The court will determine if the party receiving the settlement was in need of the funds to meet basic living expenses. If so, that looks like support and not a property division.

Nature of the Property Divided: An income stream awarded to one party may be viewed more analogous to support than property division.

Termination: If the obligation to pay terminates upon remarriage or the emancipation of a child, then the provision tends to be considered a support payment.