Can you discharge spousal payments when filing bankruptcy?
Full Question:
Is it possible to discharge spousal support payments which have been turned into a note with a bankruptcy filing.
05/15/2007 |
Category: Bankruptcy |
State: Texas |
#4795
Answer:
Alimony payments are generally not dischargeable in bankruptcy proceedings. However, a question occasionally arises over the nature of a particular award - is it alimony, or is it a property settlement? The distinction is important, because a property settlement may be dischargeable in bankruptcy proceedings. The fundamental inquiry then becomes whether the intent of the divorce court and the ex-spouses was to provide support or divide marital property.
In determining whether a debt is in the nature of support/maintenance or whether it is properly characterized as a division of property, courts have considered the following factors:
1. whether the obligation terminates upon the death or remarriage of either spouse (termination of the obligation indicates the obligation was for support);
2. whether the obligation is payable in a lump sum or in installments over a period of time (obligation spread over time indicates the obligation was for support);
3. whether the payments attempt to balance the parties' income (payments to balance income indicate the payments were for support);
4. the characterization of the obligation in the divorce decree (obligations described as support indicate the obligation was for support);
5. the placement of the obligation in the decree (obligations under the heading support indicate the obligation was for support);
6. whether there is any mention of support payments (separate mention of support payments indicates the obligation is not for support);
7. whether there are children who need support (if children are of the age when support is required, this indicates the payments may be for support);
8. whether there is a large differential in net income (a large differential in income would indicate the payments were for support);
9. whether the obligation was thought to be taxable to the recipient (payments thought to be taxable indicate the payments were for support); and
10. waivers of maintenance.