02 Oct Bankruptcy and Divorce Obligations
Bankruptcy and divorce law do not always play well together. Here’s how it looks after the October, 2005 reforms.
Child custody and visitation: Not affected at all by bankruptcy. No change from prior law. (Bankruptcy is only about money, folks.)
Child support and alimony: (Called a Domestic Support Obligation, or DSO.) Not discharged in either Chapter 7 or 13. Moreover, one cannot receive a Chapter 13 discharge for any debt unless all past due support is caught up in the case. (You can get a discharge of other debts in Chapter 7, and you can still use Chapter 13 to stop a foreclosure and catch up on the missed payments, however. You just don’t get a discharge.) The trustee in either case must give special notices to the child support/DSO creditor.
Property division obligations, including marital debt assumptions: Not discharged in Chapter 7; is discharged in Chapter 13.
Real estate transfers before bankruptcy: In the First Circuit region of New England (but not Connecticut) and Puerto Rico at least, a pre-bankruptcy transfer of real estate, by a bankrupt to a former spouse pursuant to a probate court order, cannot be attacked as a fraudulent transfer. (A trustee can reverse a fraudulent transfer, where the bankrupt did not receive fair value in return, for the benefit of the bankrupt’s creditors.) The court ruled that this kind of transfer was to a co-owner and not on account of a debt, requirements for the definition of a fraudulent transfer.Ford v. Skorich (In re Ford), 482 F.3d 21 (CA 1 2007).
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