Arizona Family Law Lawyer & Attorney : NRG - Nirenstein Ruotolo Group

The bill also has some positive aspects. Under current bankruptcy law, support payments are immediately stayed, meaning that until a recipient petitions and is granted relief by the court or until the bankruptcy is finalized, no support payments are required to be made. Bankruptcy proceedings could take a few weeks, a few months, or even longer. Under the new law, the stay is automatically lifted, providing immediate relief to those dependent upon the payments. In addition, once the debtor is under a bankruptcy plan and fails to make support payments, the recipient has the right to go to bankruptcy court and ask the court to dismiss the plan.

The new law requires recipients to be notified immediately when a debtor declares bankruptcy and when the debtor is released from bankruptcy, as well as of the debtor's address, the name and address of his employer and the names of all surviving debt collectors. Recipients can thus go to court immediately to ensure they receive the portion of wages to which they are entitled.

Because of its implications, this legislation should be taken into account when structuring future divorce settlements. For example, it may be safer to receive assets up front, even if they are discounted to less than fair value, than to be dependent upon a future stream of income. This is particularly true if the payments will be part of the property settlement and not support. If this is not an option, it may be possible to have at least part of what would otherwise be considered to be a property settlement characterized as support, thus giving it highest priority.