The bankruptcy code does not permit the debtor to receive a discharge on a "domestic support' obligation. This means that child support and alimony must be paid after the conclusion of the bankruptcy case. In the context of a Chapter 13 case, all of the child support and/or alimony that is past due at the time of the filing of the case must be paid inside the Chapter 13 Plan. The Chapter 13 Plan must be completed within sixty (60) months, so this can pose a strategical problem for debtors who owe a massive amount of Child support or spousal support.
There are some instances where the Debtor can get a Chapter 13 Plan confirmed without paying all of the domestic support arrears. In the situation where the Debtor owes a government agency for the past due domestic support. the government agency can agree to forego payment on all of the arrears inside the Chapter 13 Plan. In the case of a Chapter 7 debtor, the domestic support obligation arrears will simply remain due and owing during the case and after the discharge order.
A Chapter 7 or Chapter 13 Debtor can receive a discharge on a monetary sum owed to a former spouse when the Divorce Decree is clear that the funds owed are related to a division of marital property award. The Debtor can avoid these obligations by way of the bankruptcy process. This can be a complicated legal issue, as both Debtor and the ex-spouse may have differing opinions over what is a "domestic support" obligation ( which cannot be discharged) and a "division of marital property award" ( which cannot be discharged). The key element that determines this issue is whether the award of marital property was intended by the domestic relations court as an award for the support of the spouse, or transfer of property in lieu of an award of spousal support.
A Debtor is required to keep all current, post-filing domestic support obligations current after the filing of a Chapter 13 case. At the end of the Chapter 13 plan, the Debtor is required to file a declaration, under oath, which states that all of the domestic support obligations are current. Conflicting evidence can be filed by the domestic support agency, a creditor or the Chapter 13 Trustee, and any post-filing delinquency can cause the Bankruptcy Court to deny the Debtor a Chapter 13 discharge. In sum, it is of the utmost importance to inform your attorney about the status of all domestic support obligations.