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What are the Factors in Determining Whether a Divorce Provision Constitutes Support or a Property Settlement?

As reported by Robin Miller of CBAR, a Florida Bankruptcy judge has helped to distinguish between a divorce support provision or a property settlement agreement. If the obligation was intended to be a support payment, then Appellant did not discharge the debt in bankruptcy. See 11 U.S.C. § 523(a)(5). If instead the obligation was intended to be a property settlement, the debt was discharged in bankruptcy.

Six factors, have been commonly used in this circuit to determine whether a debtor’s obligation arising from a marital dissolution constitutes support or a property settlement:

(1) whether the obligation terminates upon death or remarriage;

(2) whether the payment was used to balance the parties’ disparate incomes;

(3) the number of payments;

(4) whether there were minor children involved who required support;

(5) the physical health and educational levels of the parties at the time of the divorce proceeding; and

(6) whether there was a need for support at the time of the divorce proceeding.

See In re Prater, 231 B.R. 819 (Bankr. M.D. Fla. 1999).

$50,000 marital dissolution award was intended as support even though designated as property settlement:

In a short opinion, the district court affirmed a bankruptcy court decision holding that the debtor’s $50,000 obligation to his former wife imposed in a dissolution of marriage judgment was intended by the spouses to be in the nature of support, even though the judgment designated the $50,000 award as a “property settlement,” rendered the award payable on a specified date, and also awarded the wife $175 weekly in alimonycontinuing until one of the parties died or until the former wife remarried.

In re Cross, 2014 WL 931067 (M.D. Fla., March 10, 2014), appeal filed, Case No. 14-11569 (11th Cir., filed April 10, 2014)

(case no. 5:12-cv-526) (District Judge Timothy J. Corrigan)