Can Alimony Recipients File Bankruptcy?

By Beverly Bird

Alimony is income -- it's money that comes into your household to help you meet your expenses. If your overall income is insufficient to pay your debts, and you're thinking of filing for bankruptcy, you must account for the amount of alimony, and it can be pivotal to which bankruptcy proceeding you're permitted to file.

Alimony is income -- it's money that comes into your household to help you meet your expenses. If your overall income is insufficient to pay your debts, and you're thinking of filing for bankruptcy, you must account for the amount of alimony, and it can be pivotal to which bankruptcy proceeding you're permitted to file.

Chapter 7 Liquidation

Chapter 7 is a liquidation process. The bankruptcy trustee takes control of your assets, sells them, and then gives the proceeds to your creditors. If this doesn't pay off all your debts, the balance of what you owe is discharged. You must qualify for this type of relief by passing a financial means test, which establishes that you don't have enough money left to satisfy your debts, after you pay your necessary monthly expenses. You must add your alimony to your earned income, and if this means that you have sufficient money left over after expenses to pay your creditors something, you'll have to file for Chapter 13, instead.

Divorce is never easy, but we can help. Learn More

Chapter 13 Bankruptcy

Chapter 13 bankruptcy involves a repayment plan. The court tallies up all the income you receive each month, and then subtracts your necessary living expenses. The balance is your disposable income, and you must turn this over to the trustee, who then gives this money to your creditors. You must include both alimony and child support as sources of income when you file a Chapter 13 petition, but child support is deducted and not legally available to your creditors, because it's for your children. However, you must use your alimony income to fund your Chapter 13 plan.

Divorce is never easy, but we can help. Learn More
Is it Smart to Declare Bankruptcy After Retirement?

References

Related articles

Do You Have to File on Everything When You File for Chapter 13?

Bankruptcy isn't a pick-and-choose answer to financial problems. If you owe a debt – even if it's just $50 to your Aunt Rose – the law obligates you to include it in your petition. This is true even if you file for Chapter 13. Your creditors usually receive at least some of what you owe, so you can't unfairly prejudice any of them by leaving them out.

Can You Work & File Chapter 7?

Being unemployed is not a condition of filing for bankruptcy, although you might find it easier to qualify for Chapter 7 if you don't have a job. Working won't disqualify you, but if your job pays well, it could mean the difference between being able to file for Chapter 7 or being forced to file for Chapter 13 instead.

Does Filing for Bankruptcy Stop Wage Garnishments?

It's an unfortunate fact of life: when you're most down on your luck, creditors tend to pile on, demanding payment and using the law to get it. Wage garnishments occur when creditors go to court and get a judgment against you, allowing them to take what you owe directly from your pay. Your employer is legally obligated to withhold a percentage of your paycheck every week and send that money to your creditor, leaving you even more unable to meet necessary living expenses. Federal law protects you against wage garnishment to some extent.

Get Divorced Online

Related articles

Can My Ex Sue Me for Back Alimony After I Filed Bankruptcy?

Although bankruptcy can provide you with a fresh start, not all debts are dischargeable. Past-due alimony, or spousal ...

Maximum Time for a Chapter 13 Bankruptcy

The amount of your income is a qualifying factor for both Chapter 7 and Chapter 13 bankruptcies. For Chapter 7, it ...

Qualifications for Federal Bankruptcy

Federal bankruptcy is the only kind of bankruptcy there is, and it involves surprisingly few requirements considering ...

New Jersey Bankruptcy Options

The United States Bankruptcy Court governs 94 separate districts. States with larger geographical areas often have ...

Browse by category