Bankruptcy, Maintenance, and Child Support
In this day and age, bankruptcy has become more common than it used to be, unfortunately, and as such, more and more people are encountering issues with other obligations that are directly related to bankruptcy. While many believe that a bankruptcy will essentially wipe out all their debt, what they do not know is that certain obligations are specifically exempted from this, and must still be paid regardless of any financial issues.
While it is not mandatory, a healthy majority of divorce cases in Illinois assign maintenance rights to one spouse or the other. In Illinois, this obligation is specified to last a certain period of time, but if the obligor (the one paying support) must declare bankruptcy, it is reasonable to look into the possibility of modification. However, the key word is modification - under the U.S. Internal Revenue Code, maintenance or alimony obligations are not considered dischargeable - in other words, any debts that are of this nature will not be simply erased, as other debts might be in a Chapter 7 bankruptcy.
There are select situations in which you can change or write off a debt of spousal support, but they are rare, involving the assignation of the debt to someone else like a family member. U.S. tax code holds that maintenance is not dischargeable because it is what is referred to as an obligation of support, but once the debt is assigned, it can no longer be said to support the spouse. Generally, even if you declare bankruptcy, you will still be on the proverbial hook for spousal support in Illinois - though this does not preclude you from attempting to deal with the issue informally and asking your spouse for a modification due to your struggling finances.
Child support obligations are almost never dischargeable. The U.S. Bankruptcy Code states explicitly that “domestic support obligations” are not dischargeable, and child support falls under this category. There is sometimes confusion on this score because if you file Chapter 13, any child support arrearages do come under the aegis of the Chapter 13 plan - but this does not mean these debts are dischargeable; it merely means that under a Chapter 13 repayment plan, the arrearages will be part of that plan.
Generally, debt relating to the care of your children is less likely to be dischargeable than if it were incurred on your own behalf. A common example is medical care - if your child requires significant medical care, a court is more likely to deem such costs as domestic support obligations, especially if these costs are foreseeable. The state of Illinois holds that child support and all its attendant expenses are due to the child, not to your ex-spouse, and as such, treats attempts to avoid payment quite seriously.
Seek Experienced Legal Assistance
Dealing with bankruptcy is very complex at the best of times, and trying to deal with one while in the midst of a divorce can be too much for any one person to bear. It can be a great help to enlist a knowledgeable divorce attorney to ensure that all the details are taken care of. The zealous Kane County divorce lawyers at The Stogsdill Law Firm, P.C. can help answer your questions and deal with your concerns. Contact us today to set up an initial appointment.