Tax Brake with Robert G. Nath, Esq.

Here's a review of some of the current and proposed law's provisions on marital/family issues. Currently alimony, maintenance, spousal or child support is not dischargeable. But there are conditions. The payment must be “in connection with” a separation or property settlement agreement, divorce decree, or other order of court, or a determination by a governmental unit in accord with state law. Also, that type of payment IS dischargeable if you conceal non-alimony type payments are just call them “alimony.” All of this won't change under the new law.

Another, relatively new exception to discharge provides that other debts in connection with divorce are NOT dischargeable if you have the ability to pay them after payments for your self, your dependents or your business. That debt is also not dischargeable if a discharge would result in a benefit to you that outweighs the detriment to your former spouse or children.

Finally, if you owe a debt to a state or city that is in the nature of support and is enforceable under the Social Security act, that's not dischargeable.

The new law leaves all of this intact but makes some important changes. Your obligations for family support get the highest priority of payment, even ahead of “administration” costs (read: ahead of attorney fees). Another change favors property tax liens, in effect stating that these can be paid ahead of family support obligations. Finally, there is a complex series of tests in the new law that examines all of your expenses to determine whether you can pay more than if the debts were discharged outright. More on that in later columns.

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