At times the intersection of Bankruptcy Law and Family Law can be a bit confusing. If you owe your former spouse money subject to a Final Judgment of Dissolution of Marriage, can a bankruptcy wipe out that debt?
Factors you need to look at include whether the debt is in the nature of alimony, child support, or equitable distribution – a property settlement. Regardless of the chapter you file, whether it be a Chapter 7 liquidation or Chapter 13 reorganization, alimony & child support cannot be discharged. If the debt is equitable distribution, then that is a different story – depending on the chapter you file.
Equitable Distribution in NOT dischargeable in a Chapter 7, whereas it is dischargeable (able to be wiped out) in a Chapter 13 – upon the successful completion of a Chapter 13 plan, which may be 3-5 years in length. Although most people would love to get in and out of bankruptcy as quickly as possible, a Chapter 13 may be more beneficial to you in the long run, since it wipes out the equitable distribution owing to the former spouse.
If you would like to know more, call for a free bankruptcy consult with Mara & Mara, P.A. We cover Volusia and Flagler counties, including Daytona Beach, Daytona Beach, and Palm Coast. We will be happy to look at your situation and discuss not only what options are available to y0u, but the pros and cons of each potential course of action as well.