Does Bankruptcy Affect Alimony in Maryland?

Published on
May 16, 2022
Written by
Angel Murphy
Category
Divorce

Bankruptcy can affect an existing alimony or child support order. If an ex-spouse suddenly loses a job or suffers another blow to his or her finances, causing one to file for bankruptcy, paying spousal support can quickly become difficult. Sometimes, an ex-spouse can accumulate back spousal support if that person cannot make multiple monthly payments due to bankruptcy filing. Several avenues exist for someone who lost the financial ability to pay their spousal support obligation because of bankruptcy.

Does Bankruptcy Affect or Eliminate Alimony Obligations?

The quick answer is “no,” and filing for bankruptcy doesn’t mean you can eliminate past spousal support obligations. This is true regardless of which form of bankruptcy a person chooses to file. A Chapter 7 bankruptcy focuses on eliminating nearly all secured and unsecured debts, but some debts are not dischargeable. Student loans are not ordinarily dischargeable, and “domestic support obligations” – i.e., child support and spousal support – are never dischargeable. Likewise, you can not eliminate domestic support obligations in either Chapter 13 or Chapter 11 bankruptcy. Although you cannot eliminate spousal support debt in bankruptcy, filing bankruptcy is useful if you struggle with spousal support payments. If applicable, a better solution would be exploring your rights through a child support modification.

Bankruptcy May Be Useful in Other Ways

Bankruptcy can still benefit ex-spouses who are having difficulties making alimony payments. The exact benefit depends on which type of bankruptcy you filed. If the person files for Chapter 7, this may be useful because non-exempt assets are used to pay off spousal support debt and other domestic support debts before other unsecured debts. When assets are liquidated in Chapter 7, the proceeds will be used to service secured creditors first, and then the remaining unsecured creditors have their order, which determines priority. Depending on the creditors, a person can pay or reduce the spousal support debt with a Chapter 7 bankruptcy. If some of the debt remains, Chapter 7 bankruptcy will eliminate other debts, making paying off spousal support debt easier.Chapter 13 bankruptcy is a form of debt restructuring created to pay debts over a fixed period (3-5 years). Chapter 13 can be helpful because, in the repayment plan, domestic support obligations have higher priority, and so those debts are paid back first. Furthermore, restructuring debts under the new payment plan makes the process of paying back spousal support debt and keeping up with current payments easier. Hence, Chapter 13 can also be a viable way to take control of spousal support debts and payment issues.Remember, spousal support orders can be modified, but the modification depends on the circumstances. If you choose this route, you must request a formal hearing and present evidence of why payments should be lowered or eliminated by showing a material and substantial change in circumstances. Remember that modification or elimination of order won’t erase back debt, and even a modified order won’t help with back spousal or child support.Contact the Murphy Law Firm for More InformationIf you’d like to learn more, contact the Murphy Law Firm today by calling 240-493-9116.

Angel Murphy

Personable. Passionate. Persistent.

Alimony|Alimony Awards|Bankruptcy|Child custody|Child Support|children support|Divorce|Eliminate obligation|Family Law|Form of bankruptcy|Spousal support debt|Spousal support obligation|Unsecured debt

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