Understanding Domestic Support Obligations in Bankruptcy

Hi everybody, thank you again for coming by. Today’s topic is domestic support obligations (DSO) and how they affect a bankruptcy case, whether it’s a Chapter 7 bankruptcy or Chapter 13 bankruptcy. DSO consists of child support and alimony or spousal support under the Bankruptcy Code.

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Graph of Domestic Support Obligations

Let’s start with this graph from my bankruptcy law textbook. For paralegals and legal studies students, I think it helps to draw out this information sometimes. If you look at this graph and understand what I’ve written, you’ve got this.

Source: Consumer Bankruptcy Law: A Practical Guide for Students and Professionals.

Reading about domestic support obligations in Title 11 of the Bankruptcy Code will make your head spin. So, let’s simplify it. Domestic support obligations include alimony/spousal support and child support. That’s all it is. It’s nothing more.

It’s important to understand that domestic support obligations cannot be discharged in bankruptcy. So, for you mothers and wives dealing with your narcissistic soon-to-be ex-husband who says, “I’m going to file for bankruptcy and wipe out child support,” the answer is no, he’s not.

There is no option to wipe out the domestic support obligations regarding bankruptcy. The law change in 2005 with the Bankruptcy Abuse Prevention and Consumer Protection Act took domestic support obligations one step further.

Not even attorney’s fees related to a domestic support obligation are dischargeable in bankruptcy. So if you go to court and your attorney is arguing about child support, let’s say one hour, that one hour of fees is not discharged in bankruptcy.

So if the husband or partner says they are filing for bankruptcy, “I’m going to wipe out everything,” no, they’re not. That cannot be done. Please don’t listen to them. Listen to me. I know what I’m talking about. They don’t know what they’re talking about.

They don’t have your best interests in mind, so they will never say something that will hurt their case. That’s just the reality of family law. I did it for over two decades, so trust me, I’m an expert on this.

Priority Claims in Chapter 13 Bankruptcy

Besides alimony and child support not being wiped out in bankruptcy, it’s also categorized as a priority claim. So, if the obligor is in Chapter 13 bankruptcy, child support and spousal support obligations are a priority over unsecured debts like credit cards.

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So, in Chapter 13 bankruptcy, child support or alimony isn’t wiped out, but it’s also at the top of the list of debts to be repaid through the bankruptcy plan. So before American Express, Bank of America, MasterCard, or any other credit card debt is paid, you will get paid first!

So that’s now two strikes against the narcissistic spouse. Strike three will be against the family law judges. I don’t know why judges continue cases believing the automatic stay affects cases like child support, other than they weren’t paying attention in judge school that day.

Realistically, family court judges are not bankruptcy experts. I did practice before a family court judge who was, so she understood it, but most of the time, they do not.

Bankruptcy Schedules

Let’s focus on Schedules I and J of the bankruptcy petition.

Schedule I (Official Bankruptcy Form 106I Schedule I: Your Income (individuals) is where income is listed as well as other financial contributions you receive.

For example, if you have a family member living in your house, and they contribute to the household expenses, that is listed in Schedule I of the bankruptcy petition. The reason why is simple enough.

If you have, let’s say, $4,000 in income, and you have $3,950 in expenses, there’s $50 available in disposable income. Great for purposes of Chapter 7 bankruptcy.

But, if you get $1,000 monthly in child support, those figures change drastically. Now you went from Chapter 7 to Chapter 13 bankruptcy. So avoid this common mistake.

The other issue is with Schedule J, where expenses are listed (Official Bankruptcy Form 106J, Schedule J: Your Expenses (individuals).

So, on Schedule J of the bankruptcy petition, all your expenses, such as a mortgage and a car payment, are listed, but so are child support and alimony obligations. If you don’t, your numbers will be out of whack, and you will go from Chapter 7 to Chapter 13 bankruptcy. The bankruptcy trustee will seek to deny your bankruptcy case.  

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Also, don’t list child support and alimony twice. If the domestic support obligations are withdrawn from your paycheck, which will be reflected in Schedule I, don’t list them again in Schedule J.  Don’t double up on your expenses. That’s a good way to aggravate the bankruptcy trustee.

Do you have any questions? Then reach out to me on social media, and feel free to post comments and subscribe to my YouTube channel.

Have a good rest of your day. I hope to hear from you. Take care everybody.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon books.

Additional blog content is available below:

• Bankruptcy
• Your Wallet

Please note the information on this site does not constitute legal advice and should be considered for informational purposes only.

This podcast was edited for clarity by Alex Hernandez.