Domestic Relations Lawyers Bankruptcy Reform and the Discharge of Marital-Settlement Promises
By Janet Flaccus · October 14, 2005 · 2005 Ark. L. Notes
In categories: Archive
I was stuck waiting for an especially slow doctor recently, and was browsing through my redlined Code. As noted in my article on Means Testing, the nice thing about the red-lined Code is that it includes the additional statutory language in red but also shows what language was deleted by the Act. It is deleted language I wish to discuss here.Recall that amounts in marital settlement agreements that are in the nature of support have always been non-dischargeable. The only change for these sums is that these amounts have a new name.”Domestic Support Obligations” is the new name and this is defined with a longer new definition in section 101. An article in itself could be written about this new definition. Fundamentally the test is still whether sums are in the nature of support.
This is not the focus of this article, however.Recall that it was only with the bankruptcy changes in 1994 that non support property-settlement amounts became presumptively non-dischargeable.This at the time was a big deal.
Under the law that existed before the Act changed it, there were three features of the treatment of non support property-division amounts that were different from the treatment of support amounts. First, the debtor could argue one of two bases to make the amounts dischargeable. The first base was that even after bankruptcy the debtor would not be able to pay the amounts. The second base was that discharge of the amounts would give a greater benefit to the debtor than it was a detriment to the former spouse who was not getting the money. These two bases challenged the courts. Just last year in my Law Notes article I accumulated the Arkansas courts cases dealing with these issues.
These two bases were removed by the Act. Now non support marital-settlement promises will be just as non dischargeable as promises in the nature of support in Chapters 7, 11 and 12. Once I noticed this change, I went to check on the second difference between support and non support amounts.