How can a divorced spouse discharge a property settlement through bankruptcy?
As mentioned above the first thing to look at is whether the settlement is actually a property settlement agreement or whether it is in the nature of alimony or a support obligation. If it is determined to be an actual support obligation then you will not be able to discharge it as part of bankruptcy. The courts may look at items such as whether there was a need for support at the time of divorce and whether the payment was to be made over time or as a lump sum. If it is determined to be property settlement agreement then you can discharge this obligation as part of a Chapter 13 bankruptcy. If you file for Chapter 13 bankruptcy then you can discharge a property settlement agreement in bankruptcy.
A spouse can sometimes discharge the property settlement through bankruptcy, but it depends upon the facts of the particular case. What is called “characterizing” of payments from one spouse to another is important if one spouse considers bankruptcy. Alimony and child support are not dischargeable, but property settlements are.
