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Are Attorney's Fees from a Divorce Dischargeable in Bankruptcy?

A lot of the clients that come in to our office have not only experienced a loss of a job, illness or disability, but many times they are in the process of either getting a divorce or have already gone through a divorce or separation. Many clients find themselves with a huge debt from attorneys fees that were awarded by the judge in a divorce or separation agreement. What are you options if you are faced with a large debt from attorneys fees that were awarded to your ex-wife or ex-husband. Can you get rid of this debt by just filing for bankruptcy?

The answer very much depends on what these fees are awarded for. Domestic support obligations are considered non dischargeable debts in bankruptcy . Debts that are awarded in order to provide support for children or alimony payments to your ex-spouse will not be eliminated in bankruptcy. If the attorney's fees are in the nature of a support obligation then you cannot eliminate them in either a Chapter 7 or Chapter 13 bankruptcy.

If the attorney's fees that were awarded are in the nature of a property settlement agreement, where it is used to offset certain assets awarded to you then you may be able to eliminate the debt at part of a Chapter 13 bankruptcy . Chapter 7 bankruptcy will not eliminate attorney's fees that were awarded as part of your divorce or separation agreement that are a property settlement. Only Chapter 13 bankruptcy can eliminate debts from a divorce or separation agreement that arose from a property settlement agreement.

Generally attorney's fees awarded as part of a divorce or separation agreement are not alimony or support payments, but rather a property settlement agreement. The key to determining whether you can discharge the debt in a bankruptcy is to determine whether this debt is a support obligation or a property settlement. A court may look toward items such as whether there was a need for a support obligation and other items to determine what type of debt this was.

If you are considering filing for bankruptcy and have attorney's fee debt from a divorce, then it is important that you consult first with a family law attorney who can provide you with a better understanding of what type of debt this is. It is also important to keep in mind that if you don't have the assets or income to pay this debt, then it may not be worth it for your ex-partner to consider pursuing you for this award.  It is a waste of time and money to pursue the collection of a debt where it is clear there is no income or assets to pay the debt with.

Categories: Divorce

Comments

James, the facts surrounding the divorce case would have to be reviewed to determine how the court may potentially rule on whether the awarded attorneys fees are a domestic support obligation or a property settlement agreement. There have been previous cases that have found that the final divorce decree’s award of attorneys fees to debtor’s former spouse was a domestic support obligation because the fees were awarded as part of the parties’ divorce litigation which included issues of child custody, spousal support, child support, and property settlement. In your case since the judgment does not state what these fees were awarded for then there is a higher potential that the bankruptcy court may find that these fees are not a domestic support obligation.

With regards to your own attorneys fees that resulted from the litigation, these can be discharged in your bankruptcy case and are not considered domestic support obligations.
I am in the process of filing for chapter 7. One causing factor was a major international child custody case (i was never married to the mother) where issues of jurisdiction and paternity had to be concluded before the visitation schedule and support being decided. As part of the outcome the judge awarded the mothers attorneys fees to me to pay. There was nothing in the order that described what the fees where for, just an amount to pay the mothers attorney. Am I liable to pay these fees still? If so does the attorney awarded the fees need to challenge my bankruptcy and or the mother? The attorney was listed as a creditor.

In addition i have my own attorneys fees which cover the above part of the case and then subsequent litigation regarding domestic violence, child custody, various challenges to the jurisdiction and finally child abduction. Am i liable to pay my own attorneys fees?

By the way the mother has disappeared overseas and is totally uncontactable.
Ann, this really depends on reviewing the facts in your divorce case and determining whether these attorney's fees were awarded as part of a property settlement. If the these fees were awarded as part of a property settlement division then you can discharge the debt in a Chapter 13 bankruptcy but not in a Chapter 7 bankruptcy.
I filed for Chapter 7 Bankruptcy on February 16, 2012. I notified my ex-husband and his attorney as creditors. On February 27, 2012, the Judge ordered me to pay my ex-husbands attorney fees of less than $2,000, the fees were for a dispute related to who was to pay cetrain property taxes during our trial. The trial was completed in 2010, the final judgement came March 31, 2011.

Am I liable for these fees? Or are they considered idscharged in bankruptcy?
First it is important that you are aware that even though the judge did not define what the attorney's fees were awarded for this does not mean that your ex-wife will not seek to argue that they are in the nature of support. There are cases were the attorney's fees were awarded as part of a visitation dispute and the bankruptcy court ruled them to be in the nature of support. Court look toward the intent of the court when the obligation was created and may examine factors such as the financial situation of the parties and the function served by the obligation to determine if it is a domestic support obligation. The best way to determine if they are potentially dischargeable is to have your attorney look at the case law in your area and how courts are treating these type of attorney fee awards. Some courts have rules that attorneys fees awarded due to bad faith litigation are not in the nature of support and are awarded as punishment. It is highly unlikely that this type of debt would be treated as discharageable under a Chapter 7 bankruptcy based on section 523(a)(15) on the bankruptcy code.
I am in the process of filing for bankruptcy Chapter 7, and not sure if I should file 13. Well, the reason for filing is that I have approximately 50K in debt and was unemployed for 2 years. I obtained a job as of the late fall, and feel like I need to just start over financially. My debts include credit cards, student loans(I know they are not dischargeable) loans, an interest payment owed to the state of MA of 5K, and one more interest debt of 2,000 for the IRS. The last debt I have pertains to my ex-wife that I have been officially divorced from since 2006. Since the original divorce I have filed motions regarding visitation and have won and back in May of 2011 I filed a contempt regarding the loss of several visits. Unfortunately I had written too much and her attorney filed for it to be dismissed/denied based on rule number 8; and she asked that I pay attorney’s fees to my ex-wife. The judge decided to deny the contempt and ruled in her favor regarding the attorney’s fees. I filed a 2-99 A and it was denied. So, may I include the attorney’s fees in to be discharged as the fees do not pertain to support, alimony, or property, nor do they belong to or divorce decree? If I file and they are not dischargeable will I receive additional time to pay the fees? I can not express how much I appreciate you taking the time to read this as do not know what to do and just want to make the best decision based on the situation; I do intend on hiring someone once I am informed. I look forward to hearing from you.

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