Support vs. Property Settlement
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How Does the Court Decide What Is Support and What is Property Settlement in a Divorce and Bankruptcy Situation?
First, if at all possible, do not negotiate a property settlement agreement while in the middle of a divorce proceeding. This is both complicated and often dangerous to one or both spouses because of the “dischargeability” situation. To determine whether one or more debts could be declared as dischargeable, the court will normally consider the following information.
- Will the debt normally end if the ex-spouse remarries or if one or more minor children reach the age of majority (18)?
- Is the debt due to be repaid in numerous installments or is a lump sum payment due in the future?
- Are there minor children who could be harmed if the debt is discharged or is all support directed to the ex-spouse only?
- What is the “overall” situation of the parties (health, education, need for agreed-upon support levels, regular income levels, minor children, etc.)?
The court weighs the benefits that may accrue to the debtor against the need and situation of the other party to the divorce. Normally the debtor will not be granted greater benefit than the level of harm that might be done to the other party and/or minor children.