Does Declaring Bankruptcy Affect Your Alimony Payments?

Alimony, also known as spousal support or maintenance, is often a vital resource for recipients and a considerable expense for the paying individual. When insurmountable debt leads the paying spouse to a bankruptcy filing, that spouse is still required to make court-ordered alimony payments. The U.S. Bankruptcy Code makes it clear that alimony debt cannot be discharged, or cleared, like some other debts.

However, there are some cases in which payments labeled as alimony in a divorce agreement are not considered alimony under the U.S. Bankruptcy Code, which requires the alimony to serve as maintenance funding for the recipient. If, for example, monthly support payments are not ordered but nonexempt property is divided in a certain way and described as “alimony,” the bankruptcy court may decide the property is not meant to provide maintenance and therefore is exempt from alimony protections.

For paying individuals facing bankruptcy, it may be possible to modify an alimony agreement so that they owe less per month on either a temporary or permanent basis. Though alimony payments cannot be changed as part of bankruptcy proceedings, modifications may be sought separately in family court. Typically, spousal support arrangements are based on each spouse’s income and ability to pay. If there has been a substantial shift in your financial situation since the time alimony was first ordered, you may have a solid case for seeking a modification.

In any case, bankruptcy cannot make your alimony obligations disappear. The law requires court-ordered alimony for an ex-spouse to be paid in full, even if a repayment plan is required. Failing to make payments could land you in contempt of court and result in various other penalties, from wage garnishment to revocation of your professional licenses.

You need an experienced bankruptcy attorney to help determine your spousal support responsibilities and entitlements when you or your ex-spouse needs to file for bankruptcy. The Law Offices of James C. Zimmermann can make your debt relief strategy as manageable as possible. We work with clients throughout New Jersey from our offices in Hackensack, Vernon, Wayne, Pompton Lakes and Nutley. Call us at 973-764-1633 or contact us online.