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Bankruptcy court rejects divorce decree

| Mar 31, 2017 | Divorce |

Virginia estranged couples should be aware of a ruling by a federal bankruptcy court regarding the authority of the divorce court. According to the ruling, an order issued by a divorce judge cannot determine whether an obligation is subject to bankruptcy relief.

The case took place in Georgia. Less than two weeks after a couple divorced, the ex-husband filed for Chapter 13 bankruptcy. Individuals who seek debt relief through Chapter 13 are required to have a steady stream of income, and they are required to submit a repayment plan to a court for its approval. The plan either three or five years depending upon the debtor’s income, and most unsecured debt that remains after the plan has been completed will be discharged. There are exceptions, however, and they include child support.

The Georgia couple’s divorce decree stipulated the ex-wife would receive $1,300 per month for child support and $53,000 as part of a property settlement. The decree also included a provision that the property division payments could not be discharged during bankruptcy. After the man filed under Chapter 13, his ex-wife filed a suit in bankruptcy court seeking a ruling that any remaining portion of the $53,000 could not be discharged.

The decree by the Georgia divorce court that the obligation would not be discharged was overruled by the federal bankruptcy court, which stated the provision violated public policy. It also determined that the state court had no jurisdiction in the matter.

As this case shows, the end of a marriage can raise legal issues over and above the usual support and child custody ones. People who are facing a divorce and who anticipate receiving some support may want meet with an attorney in order to ensure that the language of a proposed order will withstand this type of judicial scrutiny.