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What happens to alimony in a bankruptcy?

Bankruptcy is one of the most straightforward and effective ways to deal with debt and other financial burdens. For people who have been through a divorce and ordered to pay support to their ex, alimony payments can be a significant contributor to this. You might be wondering what exactly will happen to those monthly payments and your support agreement after you file for bankruptcy.

The answer lies in the difference between dischargeable and nondischargeable forms of debt. While the former allows for elimination under bankruptcy, the latter does not. Alimony, unfortunately, is a nondischargeable debt. Despite this fact, there are two exceptions that may apply.

Incorrect classification of support

According to the New Hampshire General Court, alimony payments may come in the form of monthly payments, a single lump sum or, in some cases, both. Regardless of how payments are to be dispersed, it is essential that they receive proper classification. Sometimes, compensatory arrangements are called alimony that do not qualify as such. If your support falls outside the definition upheld by the state, it may be eligible for discharge.

Involvement of a third party

A third party entering the spousal support agreement may also make the order's payments eligible for discharge via bankruptcy. Life changes may lead a support recipient to assign collection duties to another party, such as a parent, but doing so complicates its status as nondischargeable. This change may mean bankruptcy can eliminate support payments.

Alternative approaches to alimony

Even if you cannot absolve support obligations by filing for bankruptcy, there are plenty of other options that can help you mitigate its financial impact. You might seek a modification of the order due to its burden. There are other debt solutions, too. An attorney can help with the problems that both alimony and debt present. Consider the value of a legal ally in addressing these issues.

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Whether you have a family law issue, an estate planning question or are considering bankruptcy, I can help you find a sustainable solution that provides relief and hope. Schedule your consultation at my Nashua, New Hampshire office today by calling 603-635-4149 or by sending us an email.

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