Will I Have to Give Up Alimony Payments If I File for Bankruptcy?
If you recently separated from your spouse or had your divorce finalized, you may be struggling financially and relying on alimony payments to pay your bills and over the costs of other necessities. While alimony can be awarded in a Florida divorce to husbands and wives alike; there is no legal connection between gender and who seeks or is awarded alimony; statistically, women tend to struggle financially more often after a divorce as a result of social and economic norms. Indeed, according to recent research from a professor of public policy at the University of North Carolina at Chapel Hill, “women are disproportionately more likely to declare bankruptcy after their family situations change, usually following a divorce or marital separation.”
Regardless of your former role in your marriage, if you are currently receiving alimony and considering a bankruptcy filing in South Florida, we know that you may be concerned about whether you will lose your alimony if you file for bankruptcy. In short, you are likely to be able to keep most or all of your alimony award, depending on your circumstances. Our bankruptcy lawyers in West Palm Beach can tell you more.
Filing for Chapter 7 Versus Chapter 13 Bankruptcy
First, a key question is whether you are planning to file for Chapter 7 or Chapter 13 bankruptcy. If you are planning to file for Chapter 7 bankruptcy, your non-exempt assets will be liquidated, but most or all of your alimony award is likely to be exempt, which we will explain in more detail below. If you are planning to file for Chapter 13 bankruptcy, which is a type of reorganization bankruptcy, you will not need to worry about losing any of your alimony payments.
In a reorganization bankruptcy (i.e., Chapter 13 for consumers) versus a liquidation bankruptcy (i.e., Chapter 7), no assets are liquidated. Instead, the debtor develops a reorganization plan through which they repay all priority and secured debts over a period of three to five years, and some or all of their unsecured debts can be discharged at the end of the bankruptcy case depending on their financial circumstances. When it comes to keeping alimony payments you are receiving as a Chapter 13 filer, the upshot is that there is no reason to think you will lose your alimony; neither alimony nor any other source of income will be subject to liquidation.
Exempting Alimony Payments in a Chapter 7 Bankruptcy
If you are planning to file for Chapter 7 bankruptcy, your non-exempt assets will be liquidated so that you can receive a discharge, as we noted above. However, there is good reason to expect that most if not all of your alimony award will be exempt.
While there is no specific Florida statute to exempt alimony in a bankruptcy case, Section 222.201 of the Florida Statutes permits the use of specific federal exemptions where applicable, including the federal exemption for “alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.” Most alimony awards are aimed at providing the receiving spouse an amount that is reasonably necessary, which often means that all of a debtor’s alimony payments received will be exempt. Your bankruptcy lawyer can discuss the meaning of “reasonably necessary” with you based on your financial circumstances and specific needs, and we can help to ensure that you can keep your alimony payments if you file for Chapter 7 bankruptcy.
Contact Our West Palm Beach Bankruptcy Lawyers Today
Do you need help exempting alimony in your Florida bankruptcy? One of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan Delaney & Eller, PLLC can help. Contact our firm today.
Sources:
law.cornell.edu/uscode/text/11
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222.html
law.cornell.edu/uscode/text/11/522
scholars.org/contribution/how-filing-legal-bankruptcy-affects-womens-health
