One term which is often heard in bankruptcy cases is “domestic support obligation” – or in bankruptcy lingo – DSO. A DSO is a type of debt defined by the Bankruptcy Code. If a person who files bankruptcy owes a domestic support obligation, it may impact on many aspects of the case. This includes your ability to be eligible for a bankruptcy case. In a Chapter 13 Bankruptcy, it may also impact on the Chapter 13 Plan requirements and your ability to confirm a Chapter 13 Plan.
Bankruptcy is so often tied to divorce and other related family actions. One of the most common reasons for a person to file a bankruptcy results from divorce and the financial struggle which can impact all involved. Understanding how any divorce debt may impact your bankruptcy case is an important step to review with an experienced bankruptcy lawyer.
The Bankruptcy Code specifically defines a “domestic support obligation” in 11 U.S.C. § 101(14A) as “a debt that accrues before, on, or after the date of the order for relief “ that is—
(A)owed to or recoverable by (i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or (ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of — (i) a separation agreement, divorce decree, or property settlement agreement; (ii) an order of a court of record; or (iii) a determination made in accordance with applicable non-bankruptcy law by a governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.11 U.S.C. § 101(14A)
For those who are not experienced bankruptcy attorneys, the definition of a domestic support obligation in the Bankruptcy Code may be overwhelming. A general list of common domestic support obligations are:
There are many situations in a bankruptcy case where a DSO may impact on the case.
First, in order to be eligible for bankruptcy protection, you must typically be current in any DSO obligations. This may include signing an affidavit or certification at your Bankruptcy Creditors Meeting.
Domestic support obligations are not dischargeable in any bankruptcy case. See 11 U.S.C. §523. This does not mean that any debt which you may owe relating to a divorce or family court matter cannot be discharged. Chapter 13 Bankruptcy may allow a debtor to discharge other “non-DSO” debts that arise from a divorce.
If you owe a domestic support obligation, you must provide the bankruptcy trustee with information to contact the DSO recipient – the person who is paid the support or alimony. The appointed trustee is required to provide the DSO recipient with information about how the bankruptcy case will impact their rights.
In a Chapter 13 Bankruptcy, if you owe past due child support, spousal support, or alimony, you will likely need to propose in your Chapter 13 Plan that it be repaid.
Consult an an attorney about domestic support obligations in New Jersey.
The information provided here, as with all information on our website, is not intended to provide legal advice to anyone considering bankruptcy. If you are experiencing serious debt problems or discussing these problems with a friend or family member, the easiest way to learn how the bankruptcy laws may protect you is to arrange a Free Case Review with an experienced New Jersey Bankruptcy Lawyer. Learn about your rights and options before you make a decision from attorneys who have helped families and businesses for over 30 years. We know that making that first call is often the hardest step but once made, you can often find relief and a fresh start for your financial future.