When Congress revamped the bankruptcy laws in 2005, one of the many things they did was try to protect the rights of divorced (or soon-to-be-divorced) people. One of the things they did was clarify the definition of debts that were incurred by a debtor for the support of another. This they did by creating the term “Domestic Support Obligation” or DSO.
In essence, a DSO is a debt (including interest) that accrues before, on, or after the date a bankruptcy is filed that is in the nature of alimony, maintenance, or support. This debt can be owed to a spouse, former spouse, or child (or parent of said child). A DSO can be created by a:
- Separation agreement
- Divorce decree
- Property settlement agreement
- Court order
- Determination made by a “governmental unit.”
DSOs are given quite a bit of priority under the bankruptcy code, often one of the first debts paid by a bankruptcy trustee. In addition, they are automatically non-dischargeable. This means that they cannot be wiped out in a chapter 7. They also must be paid in full in a chapter 13. For this reason, careful consideration needs to be given this type of debt when filing.
So What Do I Do?
If you live in southern New Jersey, are in the midst of a divorce, or soon will be, expect to be the payor or recipient of a domestic support obligation, and are thinking about filing bankruptcy, please feel free to call me at 856-432-4113 or contact me through this web site for a free consultation in my Woodbury office.
If you are looking for more information on how bankruptcy might help you with your divorce, then you should download my free book, Top Questions Divorcing Couples Ask About NJ Bankruptcy.