Sometimes even the most careful wording of a document can’t keep you out of trouble! This is true, in particular, of prenuptial agreements in bankruptcy.
A New Jersey bankruptcy judge ruled in 2011 that an obligation from a prenuptial agreement, invoked in a divorce and preserved in a family court order, cannot be discharged in a chapter 7 bankruptcy. How did this happen?
The answer lies in the language in the bankruptcy code that makes support obligations non-dischargeable. The creditor will prevail if he or she can prove that
- the or she is a person with a particular relationship with the debtor (e.g. is or was married to him/her)
- the nature of the obligation is for support
- the source of the obligation is an agreement, court order, or other determination, and
- the obligation was not assigned to someone outside the relationship.
In this case the two were married, an order was issued by the family court creating the obligation, and said obligation was not assigned to anyone. Thus the sole issue was whether the obligation was for support.
It is not even necessary that the prenuptial agreement or the fmily court's order enforcing it state that the obligation is for support. A bankruptcy judge can make his or her own decision on whether the obligation in the prenup was for support! In cases such as this, the courts look to the intent of the parties. Get more information about this case here.
So What Do I Do?
If you live in southern New Jersey, are considering filing bankruptcy, and are worried about what obligations in your divorce can be discharged, please feel free to call my office at 856-432-4113 orcontact me through this site for a free consultation in my Woodbury office to discuss your case.
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.