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Support obligations after Chapter 13

On Behalf of | Nov 29, 2016 | Bankruptcy

When Virginia couples divorce, their finances often suffer. This is because they have had to divide their assets, pay off debts and establish separate households. In some cases, it may become necessary for one of the parties to seek relief from overwhelming debt through bankruptcy.

In many cases, an individual who is employed and owns some assets, such as a car or home, may opt to file for Chapter 13 bankruptcy as a way of managing their debt. In Chapter 13, the debtor can keep his or her property but must complete a court-approved debt repayment plan that lasts three or five years. At the end of repayment, the court discharges any remaining eligible debt.

Some debts cannot be discharged in bankruptcy, however, and these include spousal and child support payments. During the Chapter 13 process, the court will examine the repayment plan to determine whether maintenance obligations are addressed. If an adequate provision is not made for making payments, the court may lift the automatic stay on the collection of backing current support payments. After the plan has been completed, the debtor will still be obligated to make support payments in accordance with the divorce settlement agreement.

The fact that bankruptcy cannot eliminate support payment obligations does not mean that it doesn’t have advantages for divorced individuals. Other financial obligations, such as credit card debt and medical debt can be reduced or eliminated through bankruptcy. In addition, filing for bankruptcy can stop creditor harassment. An attorney can outline other advantages while explaining the eligibility requirements associated with both Chapter 7 and Chapter 13.