Atlanta Bankruptcy Impact on Divorce Settlement

What Will Happen to My Divorce Settlement if My Ex-Spouse Files Bankruptcy in Atlanta? - BLG Bankruptcy

Unfortunately, money troubles can affect the health of people’s relationships. That said, it should not be surprising that bankruptcy and divorce proceedings often occur simultaneously or are filed at almost the same time. However, if you are going through divorce proceedings and your ex-spouse is filing bankruptcy in Atlanta, it is not unreasonable to worry that bankruptcy proceedings may affect the financial benefits you are expecting from a divorce settlement.

Atlanta Bankruptcy & Divorce Settlements

Generally speaking, alimony, support, and maintenance awards resulting from divorce proceedings are protected from discharge through bankruptcy – meaning that your ex-spouse will not be able to rid themselves of this obligation. Divorce decrees, as well as separation agreements, are under the purview of 11 U.S.C. Section 532(a)(15). This section declares that these debts are generally not dischargeable through bankruptcy proceedings.

The two exceptions to this protection that may jeopardize your continued alimony or support award fall under subsections (A) and (B) of the same statute. A debtor may secure a discharge of divorce settlement financial obligation if:

  • The debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a debtor’s dependent and if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or
  • Discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, a former spouse, or a child of the debtor.

These exceptions are not granted easily – as a general rule, domestic support obligations including child support and maintenance receive priority treatment in bankruptcy proceedings. In Chapter 7 proceedings all support obligations receive a distribution of assets to fulfill them first, and in Chapter 13 proceedings any support obligation must be paid in full during the entirety of the proceedings or the petitioner risks a denial of discharge of their debt.

Get Advice from an Atlanta Bankruptcy Attorney Today

The stress from bankruptcy alone – let alone bankruptcy in combination with a recent divorce – can be overwhelming, but it is important to ask questions and educate yourself on the potential consequences an ex-spouse’s bankruptcy may have on your finances and your expected future cash flow.

If you find yourself in this situation and are wondering how this may affect you and what you can do, speak to the experienced Atlanta bankruptcy attorneys at The Ballard Law Group. We are here to help walk you through the potential outcomes of a bankruptcy proceeding and advise you on the appropriate next steps to take. We offer a free consultation where we can evaluate your unique situation and talk about how the bankruptcy rules may impact your particular case. Contact us today in order to schedule your free consultation. You can reach us by calling (404) 800-9939.