Family Support And Bankruptcy: What To Consider
When you are considering personal bankruptcy, understanding how the specific type of bankruptcy you file for will impact your personal finances can be daunting and confusing. There are many different issues to consider in any personal bankruptcy filing, whether you are filing for a liquidation bankruptcy or reorganization bankruptcy. You likely have questions about what types of assets you will be able to keep and whether your property will be subject to liquidation, how your bankruptcy case will affect current loans or lines of credit, how a bankruptcy filing can impact your credit, and what kinds of debts are dischargeable through a consumer bankruptcy case.
Family support is one of the common types of assets or debts — depending upon your circumstances — that people have questions about when they are filing for Chapter 7 or Chapter 13 bankruptcy. Can you keep alimony or child support you receive if you are the spouse receiving family support payments? Or, if you are the spouse responsible for making family support payments to an ex, can you have outstanding family support debt discharged? Our West Palm Beach bankruptcy lawyers can give you more information according to U.S. bankruptcy law and Florida state law.
Family Support Debt Cannot Be Discharged
The first thing to know about family support, including alimony or spousal maintenance, as well as child support, is that if you are supposed to be making payments for either of these forms of support but have missed payments and now have debt as a result, you cannot discharge these debts in bankruptcy. The U.S. Bankruptcy Code has specific exceptions to discharge, and one of those exceptions is “for a domestic support obligation.”
There are no exceptions to this exception. If you were supposed to be paying alimony or child support, you cannot have your debt due to unpaid support discharged in a personal bankruptcy case.
Family Support Is Largely Exempt
What will happen to domestic support in the form of alimony or child support if you are filing for bankruptcy and you receive domestic support payments? In other words, can you keep this money? In large part, family support is exempt, but whether or not it is exempt will likely only impact your ability to keep these payments if you are filing for a liquidation bankruptcy.
If you are filing for Chapter 13 bankruptcy, none of your assets will be liquidated. Accordingly, any family support you receive will be money that you can keep. Depending upon whether or not it is exempt under Florida law, the amount you receive could impact the total amount of your monthly repayment plan, but you will not be required to hand over any part of your support payments. If you are filing for Chapter 7 bankruptcy, any domestic support you receive will be exempt if it is reasonably necessary for your support or the support of your children.
Contact a West Palm Beach Bankruptcy Attorney
Do you have questions about family support or other issues in a personal bankruptcy case? An experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan & Eller can help you. Do not hesitate to get in touch with us for more information.