Child support and alimony obligations are given special treatment in a bankruptcy case. In 2005, obligations to pay child support or alimony were renamed “domestic support obligations” (DSO) in the Bankruptcy Code. DSOs are given priority in payment and are also non-dischargeable.
Child Support and Alimony Basics
Section 507(a)(1) of the Bankruptcy Code give past due child support and alimony first priority, only behind the costs to administer the bankruptcy case. This means that they receive payment before any other unsecured creditors in a Chapter 7 or Chapter 13 case. As an added requirement in a Chapter 13 case, past due child support or alimony must be paid in full during the life of the case. In a Chapter 7 case, although a DSO claimant has priority in payment it is not necessarily paid in full.
Section 523(a)(5) of the Bankruptcy Code also provides that a DSO is a non-dischargeable debt. Basically, an obligation to pay a DSO is not discharged like other debts. The obligation to pay the DSO survives after the bankruptcy case is closed and the debtor remains responsible for paying it even after receiving a bankruptcy discharge.
As noted above, in order to have a Chapter 13 plan approved by the court a debtor’s plan must fully pay any past due DSO. In addition, the debtor must also keep current o any DSO payments that become due after the filing of the case. Failing to keep current on DSO payments is grounds for denying confirmation (approval) of a Chapter 13 plan. Moreover, failing to pay a DSO that becomes due after the filing is grounds for the court to convert the case to a Chapter 7 case or dismiss the case altogether.
As a final note, DSOs do not necessarily include payments that may be due based upon property settlements. If payments are being made for property settlement and are not in the nature of a DSO the obligation may be dischargeable. However, such property settlement obligations are only discharageable in a Chapter 13 case. Property settlement obligations are not able to be discharged in a Chapter 7 case.
