Woman still required to repay alimony after bankruptcy

On behalf of The Walters Law Group, Ltd. posted in Divorce on Monday, December 23, 2013.

Illinois residents may be interested in a recent ruling made by the United States Court of Appeals for the Tenth Circuit on Dec. 9. According to the ruling, after filing for Chapter 7 bankruptcy, a woman who received alimony payments beyond the terms ordered by the court still has to return the funds to her ex-husband.

A report says that the couple was married in 1988 and filed for divorce in 2005. After the separation, the man was ordered to provide support payments to his ex-wife in the amount of $2,500 per month. The payments were to continue until either the man or the woman died, the woman remarried or after 10 years had passed. In 2009 the man moved to have the order terminate and suggested that his wife had been living with another man for two years. Because the arrangement was similar to a marriage, courts granted the man’s motion and ordered the wife to pay $40,660 in overpaid spousal support and an additional $10,000 in attorney’s fees.

The next year, the woman filed for bankruptcy, and her ex-husband claimed that the money owed to him could not be discharged under Chapter 7 bankruptcy protection. After a series of motions and appeals, the case was taken to the U.S. Court of Appeals for the Tenth Circuit. The court upheld previous rulings that stated that the woman’s debts to her husband could not be discharged because of certain sections of the bankruptcy code. However, the court suggested that they did not have the ability award attorney’s fees that resulted from the proceedings.

In this case, the difficulty involving the alimony was exacerbated by questions regarding the status of the payments after bankruptcy. However, even without the additional legal questions, divorce may still be a difficult and complicated process. A family law lawyer working with individuals filing for divorce may be able to advise clients when similar problems occur.

Source: Bloomberg, “Debt Owed to Ex-Husband for Overpayment of Spousal Support is Nondischargeable“, Diane Davis, December 16, 2013