At Graves Andrews, LLC, we understand that certain significant life events may have made your financial standing less impressive than when you initially underwent a divorce. In a worst-case scenario, you may now find yourself in a situation where you need to declare bankruptcy to stay afloat. However, the New Jersey family court may not be so understanding. That is, the court may not let you off the hook for fulfilling your alimony obligation. If you are facing bankruptcy in Morristown or anywhere in New Jersey, it’s imperative to understand how federal bankruptcy law and New Jersey law interact. Though bankruptcy can eliminate certain debts, domestic support obligations, including alimony payments, are handled differently under federal law. Follow along to find out whether you must continue paying alimony if you go bankrupt and how a proficient Morristown alimony lawyer at Graves Andrews, LLC can help you overcome this dire financial situation.
Do I Need To Continue Paying Alimony If I Go Bankrupt?
You must understand that, upon filing for Chapter 7 bankruptcy, your debts may be divided into what are considered dischargeable debts and non-dischargeable debts. As the name suggests, dischargeable debts may be eliminated from the total debts you are obligated to pay. Examples may include your credit card debts, your medical bills, your past-due utility bills, and even certain personal loans.
Alternatively, non-dischargeable debts cannot be wiped clean from your debt obligations. Such debts consist of certain taxes, government fines, debts for personal injury, and, namely, your alimony order. It is worth mentioning that the same rule applies to your child support order. If you continually fail to meet these domestic support obligations, then your wages may begin getting garnished, among other consequences.
Under 11 U.S.C. § 523 (a)(5), domestic support obligations, including alimony and child support, are explicitly classified as non-dischargeable debts during bankruptcy. As such, filing for Chapter 7 or Chapter 13 will not terminate your court-ordered obligation to pay these debts.
Dischargeable vs. Non-Dischargeable Debts
Dischargeable debts generally include:
- Credit card balances
- Medical bills
- Certain unsecured debts
- Personal loans
Non-dischargeable debts include:
- Alimony
- Child support
- Certain state and federal tax obligations
- Debts caused by personal injury
- Victim restitution from a criminal case
Does the Type of Bankruptcy Matter for Alimony Payments in New Jersey?
While bankruptcy does not eliminate your obligation to make alimony payments, the chapter you file under can impact how you handle your financial obligations in the future. As such, understanding the differences between Chapter 7 and Chapter 13 bankruptcy is critical.
How Chapter 7 Impacts Bankruptcy
- Eliminates eligible dischargeable debts through the liquidation of non-exempt assets
- Does not get rid of domestic support obligations
- Can free up income to pay obligations
- Compliance with court-orders is required
How Chapter 13 Impacts Bankruptcy
- Creates a three to five-year repayment plan
- Requires continued payment of domestic support obligations
- My be able to repay arrears through the repayment plan
- Failure to remain current on payments can result in the dismissal of the bankruptcy case
What Happens if I Stop Paying Alimony During Bankruptcy?
If you stop making your court-ordered alimony payments while your Morristown bankruptcy case is ongoing, you can anticipate facing serious legal consequences. Despite your bankruptcy filing, the Morris County Superior Court, Family Part, can strictly enforce non-payment of support obligations during this process.
Potential Consequence for Non-Payment
- Wage garnishment
- Bank account levies
- Interest accumulating on arrears
- Driver’s license suspension
- Liens on property
- Contempt charges
- Potential incarceration in extreme cases
In What Ways Can I Modify Or Terminate My Alimony Order?
The irony of this situation is that your costly divorce proceedings may have driven you to bankruptcy in the first place. And your hefty alimony order may just make your financial situation worse. But you may rest assured knowing that you may formally petition for a modification or the overall termination of your alimony order.
In New Jersey, alimony modification requests are filed in the Superior Court of New Jersey, Family Division, in the county where the original divorce order was issued, or in the county where either party currently resides. In accordance with N.J.S.A § 2A:34-23, the court will only modify an alimony payment if the party requesting the modification is able to demonstrate that a substantial change in circumstances has occurred to warrant the change.
Grounds for Alimony Modification in New Jersey
- Your former spouse remarried
- Your former spouse has gained financial independence
- You have suffered an injury or illness that increases your cost of living
- You have experienced an involuntary lay off or reduction in income
- You have reached retirement age
- You have declared bankruptcy following the initial order
What You Must Prove to the Court
For the court to grant a modification, you must be able to prove the following:
- A substantial change in circumstances has occured
- The change happened after the divorce judgement was finalized
- The change was not voluntary or in bad faith
- The current alimony order is no longer reasonable
- You have documentation supporting the modification request
Contact Our Experienced Morris County Divorce Attorneys Today
So when it comes to your petition for alimony modification or termination, there is no question that a talented Morristown family law attorney is the best fit for you. At Graves Andrews, LLC, we understand how difficult these matters can be to navigate, which is why we will do everything in our power to help you fight for the best possible outcome. Contact our firm today to learn how we can represent you.