When someone files for bankruptcy, one of the most common issues is how to handle alimony payments. If you're getting divorced and receiving or paying alimony, you may wonder how a bankruptcy filing will affect your rights or obligations. The good news is that several legal guidelines determine how alimony is handled in bankruptcy. By understanding these guidelines, you can make informed decisions about your financial future.
#1: Types of Alimony
When it comes to bankruptcy, it's essential to understand the different alimony types:
- There is permanent alimony, which is paid over a long period and based on the standard of living established during the marriage.
- There is temporary alimony, which is designed to provide support during the divorce process while property and other assets are being divided.
- There is rehabilitative alimony, designed to help the receiving spouse get back on their feet after the divorce.
#2: Alimony and Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy, your unsecured debts (including credit card debt, medical bills, and personal loans) are discharged or forgiven, meaning you don't have to pay them back. However, alimony payments are considered a priority debt, which is not dischargeable in bankruptcy. This means that if you're receiving alimony, you can continue to receive it even after you file for bankruptcy. If you're paying alimony, you'll still have to make those payments.
#3: Alimony and Chapter 13 Bankruptcy
In a Chapter 13 bankruptcy, you create a repayment plan to pay your debts over three to five years. During this time, you must make all required alimony payments. If you're receiving alimony, that payment is considered income, and you may have to pay more into your repayment plan. Whether you're paying or receiving alimony, it's essential to understand that any missed payments can result in the loss of specific bankruptcy protections.
#4: Modifying Alimony During Bankruptcy
If you're receiving alimony and filing for bankruptcy, you must understand that the bankruptcy court cannot modify your alimony payments. However, you can request a modification from the state court initially awarded the alimony. If you're paying alimony and filing for bankruptcy, you can't modify your payments through bankruptcy either. However, you can request a modification from the state court if you're facing financial hardships.
Bankruptcy Attorneys Serving Northwest Arkansas
Understanding how alimony works in bankruptcy is crucial for both payers and recipients. By familiarizing yourself with the basics, considering the factors involved, and seeking professional guidance, you can navigate this complex terrain successfully. At Martin Attorneys, PA, we are dedicated to helping individuals like you through bankruptcy, ensuring your rights and obligations are protected every step of the way. Contact us today at (479) 888-2039 to get started.
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