Bankruptcy does not wipe out child support or maintenance (alimony). Federal law excepts every "domestic support obligation" from discharge. Other obligations created by a divorce, such as a payment to even out the property division or a promise to pay a joint debt, get more complicated treatment that depends on the chapter of bankruptcy. This page explains how the Bankruptcy Code and a Montana divorce interact. It is part of our Montana Divorce Guide. A&M Law is a family law firm, and anyone considering bankruptcy should see a bankruptcy lawyer.
Support Obligations Are Not Discharged
Section 523(a) of the Bankruptcy Code lists debts that a discharge does not reach. Paragraph (5) is five words: "for a domestic support obligation."
The definition is in 11 U.S.C. § 101(14A). A domestic support obligation is a debt that accrues before, on, or after the bankruptcy filing, including interest, that is:
- owed to or recoverable by a spouse, former spouse, or child of the debtor (or the child's parent, legal guardian, or responsible relative), or a governmental unit;
- "in the nature of alimony, maintenance, or support," without regard to whether the debt is expressly so designated; and
- established by a separation agreement, divorce decree, property settlement agreement, court order, or a governmental unit's determination.
The phrase "without regard to whether such debt is expressly so designated" means a bankruptcy court looks at what an obligation actually does, not only at its label in the decree.
Property Settlement Debts and Section 523(a)(15)
A decree often creates obligations that are not support: an equalization payment, a buyout of a house or business, or a promise to pay a debt and hold the other spouse harmless. Paragraph (15) of § 523(a) excepts from discharge a debt "to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record."
| Kind of debt | Treatment | Source |
|---|---|---|
| Domestic support obligation (child support, maintenance, and debts in the nature of support) | Not discharged | 11 U.S.C. § 523(a)(5) |
| Other debt to a spouse, former spouse, or child incurred in the course of a divorce or under a decree or separation agreement | Not discharged in the chapters listed in § 523(a). Not on the list of exceptions to a Chapter 13 discharge granted after all plan payments. | 11 U.S.C. §§ 523(a)(15), 1328(a)(2) |
| Joint debt owed to an outside creditor, such as a credit card | The filer's own liability to the creditor may be discharged. The other spouse's liability to the creditor is not affected by the decree. | See a bankruptcy lawyer |
The opening words of § 523(a) apply it to discharges under listed sections of the Code, including Chapter 7. A Chapter 13 discharge entered after the debtor completes all plan payments is governed by § 1328(a). Its list of excepted debts names paragraph (5) of § 523(a), so support still survives, but it does not name paragraph (15). That difference is why the line between support and property matters so much in a Chapter 13 case, and it is squarely a question for a bankruptcy lawyer.
The Automatic Stay and a Pending Divorce
Filing bankruptcy triggers an automatic stay that halts most collection activity and lawsuits against the debtor. Family cases get specific exceptions in 11 U.S.C. § 362(b)(2). The stay does not stop:
- a proceeding to establish paternity, or to establish or modify an order for domestic support obligations;
- a proceeding concerning child custody or visitation, or regarding domestic violence;
- a proceeding for the dissolution of a marriage, "except to the extent that such proceeding seeks to determine the division of property that is property of the estate";
- collection of a domestic support obligation from property that is not property of the estate; or
- withholding of income for payment of a domestic support obligation under a court or administrative order or a statute.
So a Montana court can still dissolve the marriage, enter a parenting plan, and set support while one spouse is in bankruptcy. Dividing property that belongs to the bankruptcy estate is the part that waits, unless the bankruptcy court permits it.
Support Has Priority Inside the Bankruptcy
Beyond surviving discharge, support claims are favored within the case. Allowed unsecured claims for domestic support obligations owed to a spouse, former spouse, or child as of the filing date hold first priority among the claims listed in 11 U.S.C. § 507(a). In Chapter 13, a debtor who is required to pay a domestic support obligation must certify that amounts due have been paid before receiving a discharge (§ 1328(a)).
Joint Debts: The Decree Does Not Bind Creditors
A Montana decree apportions debts between the spouses. A lender or card issuer was not a party to the divorce, and its contract with each borrower stays as it was. Two consequences follow.
- If the decree assigns a joint debt to one spouse and that spouse does not pay, the creditor can still look to the other.
- If the spouse who was assigned the debt files bankruptcy, that spouse's own liability to the creditor may be discharged while the other spouse remains liable. The promise in the decree to pay the debt is a separate obligation between the former spouses.
This is why how debt is handled in a settlement deserves as much attention as who gets which asset. See dividing debt in a divorce and credit and joint accounts after divorce.
Timing and Getting the Right Advice
Whether to file bankruptcy before, during, or after a divorce turns on facts: the kind and amount of debt, each spouse's income, what property is at stake, and which chapter is available. There is no general answer, and the right choice for one spouse may not be right for the other.
What can be said generally is that the two cases should be planned together. Full financial disclosure is required in both. While a Montana divorce is pending, the automatic economic restraining order also limits what either spouse may do with marital property, so raise any planned bankruptcy filing with your divorce lawyer first. If your former spouse has stopped paying and mentions bankruptcy, see when your ex stops paying and enforcing a divorce decree, and for maintenance itself, our maintenance overview.
This page explains the law in general, based on the current text of Title 11 of the United States Code. It is not legal advice about your specific case, and it is not bankruptcy advice.