Domestic Support Obligations, Part 3--Protecting Support Creditors in Bankruptcy. Key Concepts


As we discussed previously in Part 1 and Part 2...

A domestic support obligation (DSO) is a debt owed by a bankruptcy debtor to a spouse, ex-spouse, child, parent, legal guardian, or governmental agency. These are obligations intended to cover the recipient obligee's basic needs and upkeep and, so, include child support and spousal maintenance under a separation agreement or court order. DSO claims are non-dischargeable in bankruptcy.

How does it all begin? ?First of all, every bankruptcy petition is filed with the clerk of the U.S. Bankruptcy Court. Although some states have several districts, Arizona has only one. Do not be deceived, there are no state court bankruptcies!

As soon as a debtor files his bankruptcy petition, the judge and trustee are assigned, the "meeting of creditors" is set, and notices are sent to every listed creditor in the petition, including child support and spousal support creditors.

The meeting of creditors is an informal hearing held at various locations throughout the state, depending on where the petition was filed. At the meeting, the trustee on the case has an opportunity to question the debtor face-to-face while under oath. Any creditor can attend the meeting and question the petitioner as well. Although the debtor must appear (or risk having his case dismissed), it is not a mandatory hearing for creditors and, in fact, they seldom attend.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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