DOMESTIC SUPPORT OBLIGATIONS IN A BANKRUPTCY
Ongoing domestic support obligations are unchanged in a bankruptcy filing. The bankruptcy court has no authority to reduce the obligation or deny the obligation. And in a chapter 13 bankruptcy, the debtor must be current on their support obligation at the time of the discharge.
Allowed unsecured claims for domestic support obligations receive first priority status in the distribution of estate assets for the sum owed, as of the petition date, to a spouse, former spouse or child. 11 US.C. § 507(a)(1)(A). Reinforcing the importance the importance of the priority status, domestic support obligations are excepted from discharge under section 523(a)(5). Domestic support claims are allowed to the extent that the claim is matured on the petition date. 11 U.S.C. § 502(b)(5).
Support obligations that mature post-petition are not allowed claims in a bankruptcy, but the expectation is the debtor will remain current on their post-petition support obligations after filing (this only affects discharge in chapter 13 bankruptcy filings).
Under § 348(d), in converted cases, claims arising after the order for relief, but before the case was converted under section 1307, will receive the benefit of prepetition treatment. Section 348 outlines the applicable time period: the claim against the estate or the debtor must arise after the order for relief but before conversion in a case that is converted under section 1112, 1208, or 1307 to be eligible to be treated as a prepetition claim.
In a chapter 7 bankruptcy, where assets of the estate are possible, the trustee will first disburse funds to the priority creditors, this includes pre-petition domestic support obligations.
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Domestic support obligations receive priority status in the distribution of assets of the estate. Claims for a domestic support obligation that arise after the filing date are not allowed claims in a bankruptcy. Contact the attorneys at LifeBackLaw and see us at www.LifeBackLaw.com and let us help you get your life back.
