Can Spousal Support Be Discharged In Bankruptcy?

People often ask whether or not spousal maintenance (also known as alimony or spousal support) can be discharged in a bankruptcy. The usual answer is NO. However the bankruptcy code offers limited exceptions to the discharge-ability of spousal maintenance. In situations when the court orders that a debt payment by one spouse is to be "treated like alimony" it can be discharged. For example, if Bob is ordered to pay the Visa debt of $100.000 per month and this is to be treated like alimony under the court order, and Bob later files bankruptcy, Bob can argue that the debt payment is in fact just a debt payment and NOT maintenance. The other exception in the code is where the court orders alimony to be paid and the recipient thereafter assigns the payment to a third party. So for example if Karen receives spousal support of $2000.00 every month and assigns her creditor landlord the right to collect the $2000.00 to cover an outstanding debt she owes, the 2000.00 in spousal maintenance can be discharged in bankruptcy because it was assigned to a third party.

You can find more specific information in the United States Bankruptcy Code. The Bankruptcy code section 523 of Title 11 states:

"A discharge under Section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt . . . (5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that (A) such debt is assigned to another entity, voluntarily, by operation of law, or otherwise (other than debts assigned pursuant to § 402(a)(26) of the Social Security Act, or any such debt which has been assigned to the Federal Government or to a State or any political subdivision of such State); or (B) such debt includes a liability designation as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support..."
Categories: Spousal Maintenance