When a person in California decides to file a bankruptcy petition, they often wonder which of their debts can be discharged. In most cases, it is the vast majority of their unsecured debts that are subject to the discharge in a personal bankruptcy such as a Chapter 7. However, there are some exceptions to that general rule.
In one recent case that may be of interest to our readers in California, a woman sought to have her spousal support debt discharged in her personal bankruptcy. The case involved the woman's Chapter 7 filing. Prior to seeking a bankruptcy, she was the subject of a judgment for repayment of over-paid alimony.
The court in the woman's family law case found that she owed her ex-husband more than $50,000 in money that he had paid to her inadvertently. In that case, the court found that the woman had violated the order that alimony payments would end if she remarried. Though not technically married, she had lived with a man for more than two years prior to the court issuing the judgment.
As is the case in personal bankruptcy matters here in California, the woman in this matter sought to have as many of her debts discharged as possible. However, the bankruptcy court determined, and an appeals court agreed, that she could not discharge her alimony-based judgment. This was due, in part, to the classification of the judgment as family based. To avoid such an outcome in another case, people in California may wish to review the applicable bankruptcy codes before entering into the debt relief process.
Source: Bloomberg Law, Debt Owed to Ex-Husband for Overpayment Of Spousal Support Is Nondischargeable, Diane Davis, Dec. 13, 2013