Child Support and Bankruptcy: What You Need to Know

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Oftentimes after a divorce, there can be some pretty significant financial difficulties that can potentially lead to a NJ bankruptcy filing. Money problems may be encountered by both parties, or perhaps only the spouse who took on most of the financial responsibility during and after the split.

Naturally, if your ex-spouse files for bankruptcy, you’re going to be more than a little worried about the outcome, especially if you are depending on him or her for child support, alimony, or other payments.

Up until 2005, it was possible for those who filed bankruptcy to include money owed to their ex-spouse in their bankruptcy filing. If it was deemed less harmful to the other spouse (the person being “owed” money in the Property Settlement Agreement, or PSA), some courts would discharge PSA debts.

Luckily, in 2005, it was made clear by Congress that all debts considered “priority debts” would absolutely NOT be dischargeable in bankruptcy cases. Child support and other divorce-related debts are considered priority debts. That is great news for you if your ex-spouse owes you money in any fashion – whether through the PSA or child support/alimony payments.

Although your ex can’t get out of child support obligations simply by filing for bankruptcy, it is possible that he or she will simply stop paying some or all of the money. When this happens, it is usually due to an ex-spouse being legitimately out of money due to job loss. However, any non-custodial spouse who is found to be in child support arrears in New Jersey will be sought by court officials regardless of the reason for not paying. Non-payment of child support is cause for a judge to issue an arrest warrant.

Can my bankrupt ex-spouse get out of paying OTHER types of divorce-related debt?

Child support and alimony aside, there are many other financial considerations during any divorce that results in a NJ bankruptcy. Things like homeowner’s association fees, credit card debt, back (or current) taxes, vehicle payments, doctor’s bills, mortgages, and other types of loans that may have been taken out jointly.

If, during your divorce proceedings, it was written into the Property Settlement Agreement that your ex-spouse is responsible for paying off any of the above-mentioned (non-priority debts), he or she WILL be held responsible for these debts even if a bankruptcy case is opened. Your ex-spouse cannot legally discharge any divorce-related debts that he or she has been ordered to pay by a court of law.

Sometimes an ex-spouse, although legally responsible for repaying a certain divorce-related debt (such as a credit card balance), will simply stop making payments regardless of the court order. Although your ex-spouse can’t legally avoid the debt, if your name is on the account, it is possible that the credit card company (or other lender) will come to you looking for the money. That is because they are a third party to your divorce and they didn’t agree to not get paid.

In this situation, or anytime you aren’t receiving money owed to you due to your ex-spouse filing for NJ bankruptcy, it’s important that you contact your family law attorney immediately.

 Image Credit: BestOnlineBanks via Flickr

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4 Responses to Child Support and Bankruptcy: What You Need to Know

  1. Pingback: Taking a Page out of Michael Vick’s Playbook: “Paying off Your Debt” | Veitengruber Law

  2. Pingback: What Can I Do About My Non-Dischargeable Debts? | Veitengruber Law

  3. Pingback: Have Your Wages Been Garnished? You Have Options. | Veitengruber Law

  4. Pingback: Divorce Attorney Fees: Can They be Discharged in Bankruptcy? | Veitengruber Law

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