The shift from being married to single following divorce often causes at least a temporary financial upheaval. Aside from legal fees for a Columbus divorce, a former spouse may have to fund a move, purchase a vehicle and buy or rent a new place to live, along with furniture and appliances. The financial jolt can be so radical that an ex-spouse is forced to file for bankruptcy.
Alimony’s effect on personal bankruptcy was an issue in a recent federal decision. An ex-husband was obligated to pay $2,500 in monthly spousal support to his former wife following a 2005 divorce. The separation agreement stipulated that the support would continue for 10 years or end upon the remarriage of the ex-wife or the death of either party.
The ex-husband in this case requested a termination of alimony when he learned that his former spouse had resided with a man for two years. The court not only agreed that the ex-husband had overpaid, but it also ordered the woman to repay more than $40,000 in alimony she was not qualified to receive, plus the former husband’s legal fees.
The year after the judgment, the woman filed for personal bankruptcy hoping to have the alimony repayment debt discharged. A Chapter 7 bankruptcy court, a bankruptcy appeals court and finally a federal appellate court wrangled with the case before a final ruling that the ex-wife could not shake the debt.
The court said she was required to fulfill a “domestic support obligation,” which is non-dischargeable. The appeals court decided that the alimony repayments were a priority over the former wife’s right to clear debts in bankruptcy.
Not all Delaware County spouses qualify for alimony, which depends on need as much as it does on the other spouse’s ability to make payments. An alimony agreement may be short-term or extend years into the future. Spousal support is likely to terminate if the recipient remarries or cohabits with a new partner for an extended time. Divorce attorneys can advise both parties on their rights and obligations regarding alimony payments.
Source: Bloomberg Law, “Debt Owed to Ex-Husband for Overpayment Of Spousal Support Is Nondischargeable” Diane Davis, Dec. 13, 2013