The 2005 revision to the Bankruptcy Code made the collection of domestic support obligations a much higher priority. Domestic support obligations are now specifically excepted from discharge, and the automatic stay does not extend to support obligations. A Chapter 13 bankruptcy case may be dismissed if the debtor fails to pay any domestic support obligation that becomes payable after the filing of the petition.
The gist of the change is that a Chapter 13 bankruptcy debtor must certify the payment in full of domestic support obligations or that the confirmed plan provides for payment of pre-bankruptcy domestic support obligations in order to obtain a final discharge of other debt through bankruptcy. Also, the priority of domestic support obligations was moved to the top of the list of priorities, and the preference provisions were amended to protect domestic support transfers from avoidance.
A Chapter 13 bankruptcy discharge does not affect post-discharge child or spousal support obligations. In other words, even at the conclusion of the bankruptcy proceeding, these on-going obligations remain and a debtor must be current to be eligible for a discharge. If a debtor is not current on child support at the filing of his bankruptcy, a Chapter 13 bankruptcy may be the best option in order for the debtor to obtain a discharge.
If you’d like to learn more about or clarify the information on this page, reach out to the bankruptcy attorneys at the Cook Law Firm today!
Mortgage paperwork mess: Next housing shock?
(CBS News) If there was a question about whether we’re headed for a second housing shock, that was settled last week with news that home prices have fallen a sixth consecutive month. Values are nearly back to levels of the Great Recession. One thing weighing on the economy is the huge number of foreclosed houses.