Are there exceptions to the priority claim of child and spousal support in bankruptcy?
Actually, there are two exceptions: The first happens if the supporting spouse falls behind in child or spousal support payments, and his or her former spouse turns those debts over to a private collection agency. Those debts change from priority claims to ordinary claims. They now can be discharged through bankruptcy. (This does not apply to collection by a IV-D agency. An IV-D agency is a public agency that seeks to enforce child support orders for those who request assistance. It is known as a IV-D (pronounced “ivy d”) agency after the section of the law that added it.) The second happens if the bankruptcy court rules that spousal support debt is another type of financial obligation. For example, if the spousal support is actually a property settlement, bankruptcy might be able to discharge this debt. This sometime happens when, for tax reasons, divorcing spouses willfully (and sometimes unwittingly) misrepresent a property settlement as support.
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