Are Lump Sum Alimony Payments Dischargeable in Bankruptcy?

This question frequently arises in the context of a subsequently filed bankruptcy proceeding. Generally, the obligor, or person who is obliged to make the lump sum alimony payment, seeks to have the payment or payments discharged through a bankruptcy proceeding.

The resolution of these types of situations is of course dependent upon the intent of the parties. The intent is ascertained by examining the language used in the parties agreement. Although the language used in an agreement is not conclusive, the words are given weight in determining the intent of the parties. Howell v. Howell, 207 So.2d 507 (Fla. 2d DCA 1968); Woodworth v. Woodworth, 385 So2d 1024 (Fla. 4th DCA 1980).

If the court ultimately determines that an obligation, which is labeled as alimony in an agreement, is in fact alimony, the alimony, which is lump sum, payable in installments, is is a vested right and not subject to modification. Such a determination would preclude the obligation from being discharged in bankruptcy, and would further subject the obligor to the contempt powers of the court if the obligation is not paid. Zuccarello v. Zuccarello, 429 So.2d 68 (Fla. 3d DCA 1983); McCombes v. McCombes, 440 So.2d 683 (Fla. 1st DCA 1983).

However, if the parties to an agreement had agreed that payments required under an agreement were for settlement of property rights, and not intended as alimony, those payments could not be enforceable by contempt, and would therefore be dischargeable in bankruptcy. Pabian v. Pabian, 480 So.2d 237 (Fla. 4th DCA 1985).

The contempt powers of the court simply cannot be used to punish someone for contempt, when the payments required from that individual are not support related. In Veiga v. State of Florida, 561 So.2d 1335, (15 Fla. L. Weekly D1487), the husband was found in criminal contempt for failing to pay his wife $25,000.00 as “lump sum alimony for purposes of equitable division of the interest in his business.” Having determined that the obligation was for property settlement issues, rather than support, the contempt order was reversed. The payment then becomes a dischargeable obligation in bankruptcy.

It is very clear from the cases that emanate from Boca Raton, Palm Beach County, South Florida as well as throughout the state of Florida, that the only remedies for non payment of property obligations are those that are available to creditors against debtors. Underwood v. Underwood, 64 So.2d 281 (Fla. 1953); Hine v. Hine, 558 So.2d 496 (Fla. 3d DCA 1990); Carlin v. Carlin, 310 So.2d 403 (Fla. 4th DCA 1975); and Howell v. Howell, 207 So.2d 507 (Fla. 2d DCA 1968).

In conclusion, the lump sum alimony payments will only be dischargeable if the intent was to treat those payments as property rights versus a true alimony obligation. Extreme caution must be exercised in drafting any agreements so as to establish clearly the true intent of the parts.