The Treatment of Domestic Support Obligations (DSO) in Chapter 7

Domestic Support Obligations (“DSO’s”)

Two questions typically arise in connection with DSO’s. First, what is it? And second, what happens to it in Chapter 7.

Here is how the Bankruptcy Code defines (very broadly) a domestic support obligation:

(14A)The term “domestic support obligation” means a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is—

(A) owed to or recoverable by—

(i) a spouse, former spouse, or child of the debtor or such child’s parent, legalguardian, or responsible relative; or

(ii) a governmental unit;

(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated;

(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—

(i) a separation agreement, divorce decree, or property settlement agreement;

(ii) an order of a court of record; or

(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and

(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.

BOTTOM LINE: it is child support,  alimony and/or property settlement obligations that a debtor has been ordered to pay by a state court having jurisdiction over the marriage, parties or relationship. Congress intended a broad definition. 

As for what happens to a DSO as a result of filing Chapter 7, the short answer is nothing. A DSO is excepted from discharge in Chapter 7 pursuant to 11 U.S.C. Section 523 (a)(5).