A negotiated court settlement or a solution imposed by a judge can set up one spouse with spousal maintenance following divorce. However, sometimes persons who receive alimony learn that a former spouse has run into financial trouble and is preparing to file for bankruptcy.
A receiving spouse could fear that a bankruptcy court will void delinquent support payments and even end the obligation to pay any more. In reality, the law considers family support payments to be of vital importance, so even bankruptcy is unlikely to interfere with the enforcement of support maintenance.
Garnishments and alimony
A person filing for bankruptcy can receive an automatic stay from the bankruptcy court. This puts a temporary hold on efforts by creditors to collect unpaid debts and can also halt wage garnishments. However, Nerdwallet explains that family courts generally retain jurisdiction over garnishments that collect for spousal maintenance and child support. Therefore, it is highly unlikely that a bankruptcy court can stop garnishments in these instances.
Bankruptcy cannot discharge alimony
Bankruptcies take different forms. A Chapter 13 bankruptcy allows for the filer to pay back a certain amount of debt through a repayment plan and discharge the rest. Chapter 7 bankruptcy is liquidation, meaning a person sells off debts to pay creditors and receives a discharge for the remaining debt, provided the debts qualify.
The state of New York and the federal government classify some debts as non-dischargeable, meaning a person retains the obligation to pay them off even in bankruptcy. According to the U.S. Courts site, debts to support a spouse and children fall under this category. Even liquidation is not enough to get someone off the hook to fulfill unpaid spousal maintenance.
The possible benefit of bankruptcy
An ex-spouse filing for bankruptcy may not signify that the filer wants to void support responsibilities. In fact, a bankruptcy that stops creditors from collecting on debt and eventually discharges some debt may free up enough assets for the paying spouse to fulfill spousal maintenance.