When you file bankruptcy you’ll still be responsible for paying child support. Congress has declared child support to be a priority debt, meaning it’s too important to be “wiped out.” Though you will still be responsible for all child support debts and payments, there are ways filing bankruptcy can help.
There are two chapters of bankruptcy that can help with paying off child support debts and keeping up with payments.
Chapter 13 bankruptcy is known as the “reorganization” approach to personal bankruptcy. There is a 3 to 5 year repayment plan set up to allow you time to catch up on overdue debts while keeping current with non-overdue debts.
The debts included in chapter 13 bankruptcy include debts and payments owed for child support. You’ll be required to pay off any over-due child support debt while still meeting monthly child support requirements. The Chapter 13 plan cannot span more than five years. If your child support debt is large, the monthly plan enacted to help you catch up may be large as well.
You must prove to the court that you are current on all child support obligations with all debt paid in full at the time you complete your case. Otherwise you cannot be discharged from bankruptcy.
Chapter 7 bankruptcy is the personal bankruptcy which gives a full release of all eligible debts to the filer. Of course, child support is not a releasable debt because it is intended to sustain the life of a child. It is actually the highest priority debt and is required to be paid off before any other non-releasable, high priority debts.
Chapter 7’s release of multiple eligible debts means there’s still less to pay on, which makes it easier to catch up and continue paying child support.
What About the Automatic Stay?
The automatic stay is what keeps most creditors from being able to collect from you when you file bankruptcy. The automatic stay doesn’t apply to certain activities regarding child support, including
- The cost of legal proceedings to establish or modify child support
- The collection of child support from property not part of the bankruptcy estate (wages earned after a Chapter 7 bankruptcy is filed are not considered property of the bankruptcy estate and are not protected by the automatic stay.)
- Withheld income intended to pay child support to an administrative, court order, or statute (regardless if the income is property of the bankruptcy estate or not).
What If I Can’t Afford Child Support Anymore?
Chapters 13 and 7 bankruptcy can help by freeing up more of your money for child support payments, but sometimes life gets too rough to handle any debt. Bankruptcy may still be able to help you. Every case is different, so seeking professional legal advice can clarify your personal options.
Bankruptcy can’t change what you owe on child support, but you might be able to. You wouldn’t be the first of many Americans who suffer from the recession. Contact a divorce or family lawyer to discuss modifying your child support payments based on your financial status.
If you have questions about how your finances or bankruptcy may affect your child support payments, contact the Sherer Law Offices for a consultation.