The Surprising Benefits: Chapter 13 Potentially Discharges Divorce Property Settlement Debts

 Posted on May 28, 2025 in Bankruptcy And Divorce

Unlike Chapter 7, which cannot discharge divorce-related property settlement debts, Chapter 13 bankruptcy may allow you to eliminate some or all of your non-support divorce obligations. For many people struggling with debt after a divorce, this can be an appealing option. 

However, the benefits of Chapter 13 come with certain risks and trade-offs that should be carefully considered. Simply owing money to your former spouse does not automatically mean Chapter 13 is your best path. Below, we explain how divorce-related debts are treated in bankruptcy, what Chapter 13 bankruptcy can and cannot do, and why you should speak to a qualified attorney if post-divorce debt is making it hard to move forward.

If your divorce decree or separation agreement left you with financial obligations — other than spousal or child support — that you cannot manage, there may be legal ways to seek relief. An experienced Boerne, TX Chapter 13 bankruptcy attorney can help you understand whether using Chapter 13 to address those debts is the right decision for your circumstances.

How Are Divorce Debts Treated in Chapter 13 Bankruptcy?

Support Debts vs. Non-Support Debts

In bankruptcy, support debts refer to obligations arising from domestic support orders including child support, alimony, and maintenance. These obligations are considered non-dischargeable in both Chapter 7 and Chapter 13. In other words, filing for bankruptcy will not erase them.

On the other hand, non-support debts generally stem from the division of property or allocation of marital debt. These include obligations such as paying your ex-spouse for their share of home equity or taking over responsibility for a joint credit card. These are not classified as domestic support obligations and are treated differently under bankruptcy law.

Chapter 13 May Allow Discharge of Non-Support Divorce Debts

The key difference between Chapter 7 and Chapter 13 is that only Chapter 13 allows the possibility of discharging non-support divorce debts, under certain conditions. This discharge comes at the end of the repayment plan, which typically lasts three to five years.

For example, if your divorce agreement required you to pay your ex-spouse $25,000 to offset the fact that you received the marital home, this payment may be classified as a non-support property settlement. In Chapter 13, that obligation could be grouped with other unsecured debts and discharged at the end of the plan, even if you only repay a portion of the total.

Similarly, if you were ordered to take on a shared credit card debt or a loan in your ex-spouse's name, your obligation to reimburse your ex-spouse could also be dischargeable — even though the underlying debt with the creditor may still be enforceable if not addressed fully in bankruptcy.

However, it is important to note that your ex-spouse may object to your Chapter 13 plan under certain conditions, especially if they believe the proposed treatment of the debt is unfair or was made in bad faith. Courts do not automatically grant these discharges; the plan must meet all legal requirements.

What Are the Advantages of Chapter 13 for Divorce Debts?

Ability to Discharge Certain Divorce-Related Debts

The primary advantage of Chapter 13 is the potential to eliminate non-support divorce debts that would otherwise remain enforceable for years. Chapter 7 offers no such relief, making Chapter 13 the only realistic option in these cases.

Protection from Collection

From the moment you file, the automatic stay goes into effect. This legal protection prevents creditors, including your ex-spouse, from pursuing collection efforts on the debts included in your case. That means no lawsuits, wage garnishments, or demands for payment while the plan is active.

Other Financial Relief

Chapter 13 can also:

• Stop a foreclosure and allow you to catch up on missed mortgage payments

• Prevent repossession of your vehicle

• Restructure or reduce other unsecured debts, such as medical bills or credit cards

• Create a predictable, court-approved monthly payment based on your ability to pay

If you are managing multiple sources of debt on top of divorce obligations, these features may make Chapter 13 even more appealing.

What Are the Disadvantages of Chapter 13 for Divorce Debts?

Despite the possible benefits, Chapter 13 is not without its drawbacks, some of which can be significant.

Delay in Receiving a Discharge

Chapter 13 takes time. Most plans last between three and five years, and you do not receive a discharge of your debts — including non-support divorce obligations — until the plan is successfully completed. During this period, you must remain current on your monthly payments. Though the automatic stay can prevent enforcement actions, you may still feel like your financial life is on hold.

This extended timeline may be worthwhile if the debt in question is large or if other aspects of Chapter 13 benefit you. But for people seeking fast relief, the delay can be a serious downside.

Risk of Not Completing the Plan

Unlike Chapter 7, which typically ends within four to six months, Chapter 13 requires long-term commitment and financial stability. Many cases fail before completion due to income loss, medical emergencies, or unexpected expenses. If you fall behind on payments, miss required court appearances, or fail to meet other obligations, your case could be dismissed, meaning you receive no discharge at all.

Additionally, your ex-spouse may object to your Chapter 13 plan during confirmation if they believe it unfairly reduces your obligation to them. While objections do not automatically succeed, they can delay your case or require modifications to your proposed plan. The court may consider factors like your income, assets, and payment history to determine whether the plan was filed in good faith and complies with bankruptcy law.

Partial (or No) Repayment of Divorce Debts

Although non-support divorce debts can be discharged in Chapter 13, they are typically classified as general unsecured debts, alongside credit cards, medical bills, and personal loans. The percentage of these debts that you will pay depends on several factors:

• Your monthly disposable income

• The length of your plan (three vs. five years)

• The total amount of priority debts (such as back taxes or child support)

• Administrative costs (including trustee fees and attorney's fees)

Some debtors pay only a small percentage of their general unsecured debts, while others pay more. In rare cases, courts allow zero percent plans, where nothing is paid on unsecured claims. But in most cases, non-support divorce debts are paid partially over time, with the unpaid balance discharged at the end.

Whether this partial payment is sufficient depends on your goals and whether your ex-spouse challenges the discharge.

Call a New Braunfels, TX Bankruptcy Attorney

Divorce can create lasting financial burdens, especially when property settlement obligations or debt assignments exceed what you can afford. If you are struggling to meet the terms of your divorce decree and are considering bankruptcy, you deserve clear, experienced guidance. 

By contacting the knowledgeable Boerne, TX bankruptcy attorney at the Law Offices of Chance M. McGhee, you can learn whether Chapter 13 provides a path to discharge your non-support divorce debt and regain financial stability. Call 210-342-3400 today to schedule your complimentary consultation and get trusted legal support in New Braunfels, TX and surrounding areas.