Dischargeable Debts in Divorce The Dissolution of Dischargeability

In 2005, a law called the BAPCPA was passed by Congress, which made almost all debts from a divorce non dischargeable in bankruptcy. This means that even debts like credit card bills and mortgage payments cannot be wiped out in bankruptcy. Before this law, there were some exceptions that allowed certain debts to be discharged, but now almost all divorce-related debts cannot be eliminated through bankruptcy. This change was made to prioritize the financial support of families over giving people a ‘fresh start’ in bankruptcy. This law applies to all bankruptcy cases filed on or after October 17, 2005. The BAPCPA of 2005 changed the rules for bankruptcy and divorce-related debts. Now, any debt incurred in a divorce or separation, like alimony or child support, cannot be discharged in bankruptcy. This means the person who owes the money has to pay it, even if they file for bankruptcy. It doesn’t matter when the debt was incurred, as long as it’s related to a divorce or separation. Other types of debts from a divorce, like property settlements, can still be discharged in bankruptcy, but only in certain types of bankruptcy cases. It’s important for lawyers and judges to be aware of these changes so they can make sure to follow the new rules. In divorce agreements, when one spouse has to pay a debt that belongs to the other spouse, there is often a clause that says the paying spouse has to protect the other spouse from that debt. This is important if the paying spouse files for bankruptcy. Before BAPCPA, courts were divided on whether debts related to a divorce agreement needed a specific clause to be considered for non-dischargeability. After BAPCPA, it’s clear that these clauses are not necessary for a finding of non-dischargeability. Debts that are no longer dischargeable include property equalization payments, credit card debts, mortgage payments, and more. Attorneys’ fees awarded in a divorce proceeding are also non-dischargeable. If a former spouse fails to pay the mortgage and a deficiency judgment is entered, it’s important for the divorce agreement to specify who is responsible for the mortgage and any resulting deficiency judgment. In simple terms, after a change to the law, debts from a divorce cannot be wiped out in bankruptcy, so one spouse can’t avoid paying money owed to the other spouse. This means family court judges and lawyers don’t have to worry about one spouse getting out of paying what they owe after a divorce. These are cases about bankruptcy and divorce. They discuss whether certain debts can be discharged in bankruptcy. The courts are deciding if debts from property settlements and alimony can be forgiven. They also talk about the priority of these debts. Some cases say the debts can be discharged, while others say they can’t. These are citations to legal cases and court decisions. They are used by lawyers and judges to reference previous cases that are similar to the one they are currently dealing with. They help provide guidance on how the law has been applied in the past. These are examples of court cases where one spouse had to pay the other’s legal fees in a divorce. In some cases, the debts were considered nondischargeable in bankruptcy, meaning they couldn’t be wiped out. This was because the fees were related to important issues like child custody or removing a lien on property. It’s important to know the rules about divorce-related debts and bankruptcy. “The Florida Bar wants its members to understand their responsibilities to the public, improve how the law is practiced, and advance the study of law.”

Source: https://www.floridabar.org/the-florida-bar-journal/dischargeable-debts-in-divorce-the-dissolution-of-dischargeability/