Alimony and Bankruptcy

Much like child support obligations, alimony typically cannot be discharged in bankruptcy. It must be paid in full except when one of two special circumstances occurs.

When a divorce decree specifies that one spouse has an obligation to a spouse that is alimony, but the obligation isn’t really in the nature of alimony, the obligation can be discharged in bankruptcy. For example, if a divorce decree says that the former husband has to pay marital debts to ABC Corporation and then specifies that the husband’s payment of the debt is to be treated as alimony, the husband may have an arguable chance of discharging the debt in bankruptcy even though the divorce papers say that the payment is alimony.

The other exception to the rule of alimony not being dischargeable is when the alimony obligation has been signed over to a third party. For example, Joe and Joanne get a divorce. At the end of the divorce, Joe is required to pay Joanne $500 each month in alimony. Unfortunately, Joe does not make his payments to Joanne, who needs money. Because Joanne needs money, she turns to her friend of independent means for a $500 loan.

In exchange for this payment, Joanne has signed over Joe’s debts to her to this independently wealthy friend. The friend now has the right to collect alimony from Joe. However, if Joe files for bankruptcy, Joe’s alimony obligation can be discharged to the extent that it has been assigned to the independently wealthy friend. So if the friend is owed $5000 by Joe, Joe can discharge that much.

Contact a Boston Bankruptcy Lawyer

If you would like to learn more about the complexities of alimony and bankruptcy or are considering filing for bankruptcy and receive alimony payments each month, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346.