Divorce Decree or Judgments. Discharge of Some Decretal Obligations in Bankruptcy
Depending on the chapter of bankruptcy completed, some divorce decree obligations may be discharged.
Court orders for domestic support obligation—a term that includes child-support, alimony, spousal maintenance and Guardian ad Litem fees for the protection of child(ren) in the divorce—cannot be discharged under either chapter 7 or 13 of the Bankruptcy Code.
However, a Chapter 13 can be used to discharge other obligations, such as a division of credit card debt in a divorce decree.
The technical/statutory details (adopted from a joint presentation I made before the Missouri Bar with a bankruptcy trustee in 2009) are summarized below:
Chapter 7 discharge orders are granted pursuant to authority of 11 U.S.C. § 727.
Chapter 13 discharge orders are granted pursuant to authority of 11 U.S.C. § 1328(a) (discharge after completion by the debtor of all payments under the plan). or §1328(b) (discharge by other circumstances); the difference between “a" and “b" are significant.
11 U.S.C. § 1328 (a) provides, as here relevant:
(a) … the court shall grant the debtor a discharge of all debts provided for by the plan … except any debt-- … (2) of the kind specified in section 507(a)(8)(C) or in paragraph (1)(B) , (1)(C) , (2) , (3) , (4) , (5) , (8) , or (9) of section 523(a) ; …
Exceptions to discharge orders— that is debts or obligations that must be paid despite the discharge order– are in 11 U.S.C. § section 523 “Exceptions to Discharge"
11 U.S.C. § 523(a)(5) and (15) “(a) A discharge under section 727… or 1328(b) of this title does not discharge an individual debtor from any debt – . . . (5) for a domestic support obligation; . . . (15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree, or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit;"
§523(15) applies to all discharge orders entered under a chapter 7 discharge order under §727: the debtor must still pay those obligations.
However, a chapter 13 discharge granted pursuant to 1328 (a) does discharge the obligations of § 523(a)(15).
Thus, a debtor who is otherwise suitable for the much quicker Chapter 7 bankruptcy may file a Chapter 13 bankruptcy simply to discharge the type of debt described in 11 U.S.C. § 523(a) (15).