Tag Archives: domestic support obligation

Alimony Dischargeable in Bankruptcy

Alimony Dischargeable in BankruptcyIs Alimony dischargeable in Bankruptcy? It might be, it depends on many factors.

Generally speaking, one of the most significant changes in the bankruptcy code in 2005 (BAPCPA) is that all domestic relations obligations created by a divorce decree or separation agreement are non-dischargeable. The spousal support defined as Domestic Support Obligations are non-dischargeable in every chapter, but non-support obligations under 523 (a)(15) MAY BE dischargable in a Chapter 13 plan.

How do we know if alimony is dischargeable in a chapter 13 bankruptcy? The court will consider the substance of the underlying obligations, as well as the relative financial circumstances of the parties at the time of their divorce. To ascertain the intent of the parties and the substance and function of the obligation, a bankruptcy judge may consider any or all of the following factors:

(1) The amount of alimony, if any, awarded by the state court and the adequacy of any such award;
(2) the need for support and the relative income of the parties at the time the divorce decree was entered;
(3) the number and age of children;
(4) the length of the marriage;
(5) whether the obligation terminates on death or remarriage of the former spouse;
(6) whether the obligation is payable over a long period of time;
(7) The age, health, education, and work experience of both parties;
(8) whether the payments were intended as economic security or retirement benefits;
(9) the standard of living established during the marriage.

If your spouse is trying to discharge your alimony you need to see an attorney right away to make sure your rights are protected. Alternatively, if you need to discharge alimony, an experienced attorney can help you determine how the court is likely to view your case.

For more information about Bankruptcy and if alimony dischargeable in bankruptcy   – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Determining the Initial Transferee in a Corporate Transaction

Determining the Initial Transferee in a Corporate TransactionDetermining the Initial Transferee in a Corporate Transaction – How does the bankruptcy court go about determining the initial transferee in a Corporate Transaction? Here is a recent court case example.

The principal of the corporate Debtor obtained a divorce from his wife pre-petition. Pursuant to the divorce decree he had a continuing support obligation to his ex-wife and their children.

During the applicable four-year fraudulent conveyance reach-back period. multiple checks totaling $68,684.25 were written to the ex-wife from the corporate Debtor’s bank accounts. The Trustee sought avoidance and recovery of these payments under §544(b), applicable state law. and §550.

The ex-wife asserted that her former husband, the Debtor’s principal was the initial transferee. She argued that though the corporate checks were made to her.  The “economic reality of the transactions” amounted to her ex-husband withdrawing corporate money to pay the support obligations. She also argued that the Debtor’s corporate financial records identified the payments as advances to its stockholder, or as a distribution of capital to him.

The Bankruptcy Court ruled for the Trustee, and appeal was taken to the First Circuit BAP. Antex, Inc., 397 B.R. 168 (1st Cir. BAP 2008). The Appellate Panel acknowledged that lower courts were split on the question of whether the principal of a debtor corporation was the initial transferee of corporate funds paid to satisfy a personal obligation.  However, the Court noted that all of the circuit courts addressing the issue (being the Fourth , Ninth, Tent h and Eleventh Circuits) had all concluded that the debtor principal was not the initial transferee. These courts found the principal lacked “legal domination and control” or , stated another way, the “right to put those funds to one’s own purpose.” The checks were direct transfers from the Debtor’s corporate account to the ex-wife and, once issued, the principal had no right to use the
money for any other purpose .  Furthermore, characterizing the payments as “advances to a stockholder” or as “distributions of capital” did nothing to establish the requisite “legal dominion and control” by the principal. If you have questions about how the courts go about determining the initial transferee in a corporate transaction – you should seek the advice of an attorney.

Determining the Initial Transferee in a Corporate Transaction – for more information about determining the initial transferee in a corporate transaction – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.