Michael and Dianne Shankle divorced. An Arkansas state court ordered Michael to
ID: 2781568 • Letter: M
Question
Michael and Dianne Shankle divorced. An Arkansas state court ordered Michael to pay Dianne alimony and child support, as well as half of the $184,000 in their investment accounts. Instead, Michael withdrew more than half of the investment funds and spent them. Over the next several years, the court repeatedly held Michael in contempt for failing to pay Dianne. Six years late, Michael filed for the Chapter 7 bankruptcy, including the petitions schedule the debt to Dianne of unpaid alimony, child support, and investment funds. Is Michael entitled to a discharge of this debt, or does it qualify as an exception? Explain.
Explanation / Answer
These debts cannot be discharged under a Chapter 7 bankruptcy. If a person files for bankruptcy under Chapter 7, he will still be responsible for the payment of these debts . Hence the unpaid alimony, child support and investment funds will not be discharged.
This is as per Statute 11 523(a) whereby amount payable
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, or a determination made in accordance with State or territorial law by a governmental unit
cannot be discharged.
Source:
https://www.law.cornell.edu/uscode/text/11/523