Domestic support obligations, which include alimony, spousal maintenance, and child support, are considered priority claims under bankruptcy law. This means that if the debtor is making monthly payments under a Chapter 13 plan, the full monthly domestic support obligation must be paid in full as part of the plan, including those payments that become due after the bankruptcy petition is filed.
It also means that under either a Chapter 13 Bankruptcy or a Chapter 7 Bankruptcy, no part of the debtor’s domestic support obligations are discharged, including the interest which has accrued on those obligations. Domestic support obligations continue to be a priority even when they are assigned to a governmental unit (usually the county Human Services Department) for collection purposes. Typically, only expenses incurred by the Bankruptcy trustee in the administration of the assets of the debtor are paid before payment is made of domestic support obligations.
In short, if you are owed child support or alimony, you will continue to receive those payments even after the person responsible to pay those obligations files for bankruptcy. Likewise, if you owe child support or alimony pursuant to a divorce decree, you will remain responsible to make those payments and to keep them current even after you have filed your bankruptcy petition.
To find out what this could mean for you in your situation, call me (507) 663-1211 or email me to schedule a free confidential appointment.