It is important for Pennsylvanians to be careful with the way that they use language in their property division agreements in order to avoid problems if their estranged spouses subsequently file for bankruptcy protection. While child support and spousal support are both considered to be non-dischargeable in bankruptcy, other ordered or agreed-upon payments may be discharged by the bankruptcy court regardless of any family court order or agreement.
In a case that was decided by a bankruptcy court in Georgia, the court ruled that family courts may not order that certain property division payments are non-dischargeable in bankruptcy. In the case, the husband filed for bankruptcy two weeks after his divorce was final. The judge had ordered him to pay his wife $53,000 as a part of the property division and had also written that it could not be discharged in bankruptcy.
The man's ex-wife sued to prevent the $53,000 payment from being discharged. The bankruptcy court ruled for the husband, however, which meant that the payment would be discharged in his case.
If a property division payment is meant to be spousal support, it is important that it is termed correctly in an agreement or court order. If it is not designated as spousal or child support, it may be discharged if the spouse who is ordered to pay decides to file for bankruptcy protection. Spousal and child support payments are not able to be discharged in bankruptcy cases. Family law attorneys may help to make certain that the language that is used in proposed property settlements will protect their clients' interests. This may help them to avoid potential pitfalls that could otherwise happen if their estranged spouses later decide to file for bankruptcy so that the clients do not lose out on payments that were meant to provide support for them.