Oftentimes clients believe that declaring some form of bankruptcy puts an immediate freeze on paying their debts, including the payment of court ordered child and spousal support. Making this assumption is not only incorrect, but can be very costly.
Under Title 11 of the United States Bankruptcy Code, a “domestic support obligation” specifically includes support payments to “a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative….” It does not matter whether the support obligation is based on a settlement agreement between the parties or if it is court ordered. In fact, pursuant to11 U.S.C. 362(b)(2) of the Code, domestic support obligations are not stayed upon any bankruptcy filing.
As such, it is clear that a party making domestic support payments cannot simply avoid this obligation by declaring bankruptcy. Failure to pay is not only impermissible, but the party who fails to make required support payments will likely be required to pay any arrearage, plus interest, face potential sanctions from the court, and pay attorney’s fees.