Utah Bankruptcy is an Awesome Tool for Managing Child Support and

Alimony Debts

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One of the most common reasons that divorced folks end up in my office is because they have gotten behind on their child support or alimony payments and can’t get caught up.

The Utah Office of Recovery Services might even be garnishing 25% paychecks to pay their support arrearages.

Under the bankruptcy code, court-ordered “domestic support obligations”, including child support and alimony, are not discharged in either chapter 7 or chapter 13 bankruptcy.

That doesn’t mean that bankruptcy isn’t an extremely helpful tool when it comes to dealing with child support or alimony obligations.

Child Support and Alimony inChapter 13 Bankruptcy

• Although “domestic support” arrearages can’t be discharged in a Utah chapter 13 bankruptcy case, such arrearages can (and in fact must) through the chapter 13 bankruptcy plan.

• Child support and alimony arrears paid through a bankruptcy plan are paid at the expense of most other creditors and are spread out over a 3 to 5 year period.

Child Support and Alimony inChapter 7 Bankruptcy

• In cases where clients might not have enough income to pay both their ordinary debts and their alimony or child-support payments, we often use a chapter 7 bankruptcy to eliminate the ordinary debts and, thereby, free up money that they can use to stay current, or catch up, on their support payments.

Child Support and Alimony inChapter 7 Bankruptcy

• An added bonus to using a chapter 7 bankruptcy in a case where a client is behind on their child support or alimony payments is that assets or money that a chapter 7 bankruptcy trustee collects are used to pay down the non-dischargeable child support, alimony, and other domestic support arrearages - even before the chapter 7 bankruptcy trustee gets paid.

Other Divorce Related Obligations and Debts

For other obligations and debts ordered to be paid as part of a divorce, such as joint debts ordered to be paid by one spouse, are treated even more favorably and can even be eliminated in a chapter 13 bankruptcy. There are some caveats to this rule, which I’ll discuss in a later post.

In short, a bankruptcy in Utah can be an awesome tool for managing child support and

alimony obligations and arrearages.

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For more information,contact a bankruptcy lawyer

Andrew Clawsonwww.theutahbankruptcylawyer.com