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Legal fees considered support by judge

South Carolina residents may be interested to know that a judge from the U.S. Court of Appeals for the 7th Circuit ruled that attorney fees are to be given priority in bankruptcy. The ruling stated that $25,000 in legal fees were to be classified as a support obligation. This was based on the debtor's desire to win child support and custody proceedings regarding his six children.

A domestic order of support is not eligible for discharge in bankruptcy. It is defined as support to a current or former spouse as well as to a child or the parent of that child. In this particular case, the debtor and his wife had joint custody of the children, and he was ordered to pay the legal fees directly to his wife. However, he instead filed for Chapter 13 bankruptcy.

He claimed that the payment could not be a DSO because it was a payment to the former spouse's attorney as opposed to the spouse herself. It was also argued that the payment was intended as a punishment for his being overly zealous during the trial as opposed to a payment in nature of support. The 7thCircuit rejected the first claim as it was never raised in the lower court and ultimately determined that the payment was in nature of support after looking at the state's intent.

Those who are facing financial challenges may wish to file for Chapter 13 bankruptcy. Doing so may entitle a debtor to retaining some or all property during a repayment period that may last up to five years. An attorney may explain the benefits of such a decision as well as explain which debts may not be discharged during bankruptcy. Generally, support payments as well as student loan or tax debts may not be discharged in bankruptcy.

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