What Happens to Child Support Arrears After Bankruptcy?
Parents have legal and financial responsibilities for their children, and sometimes they have difficulty maintaining those responsibilities.
The most common manifestation of this is when parents aren’t able to pay child support payments. While some prefer to call this a “missed payment,” the court will hold parents responsible if they have not paid their dues. In many cases, these missed payments can snowball into major debt. The courts take this obligation very seriously and will not often relieve parents of this duty easily.
Sometimes parents miss child support payments because they cannot afford them. This is often the case for parents who are filing for bankruptcy. It’s important for parents who have missed payments before bankruptcy to start thinking about child support arrears.
To make sure we’re all on the same page, child support arrears are past due child support payments that are still owed to the parent who has custody of the children.
If you are planning on filing for bankruptcy, you might be wondering how to get out of paying child support arrears.
There’s a simple answer to that question: you are not able to get out of paying child support arrears, even if you file for bankruptcy successfully.
Child support, family support, alimony, spousal maintenance, and spousal support are deemed as non-dischargeable debts in bankruptcy. This means that child support, in particular, can never be eliminated in a bankruptcy proceeding. However, it is crucial to note that bankruptcy can still help especially in situations where support obligations are in arrears.
In most cases, the Bankruptcy Court can establish a forum to address disputes on what you owe prior to filing for a bankruptcy and a bankruptcy judge can address any accounting issues. However, the same court will not address support orders or modify ongoing support made by the Family Law Court.
Although the typical bankruptcy cannot address your questions on how to get child support arrears dismissed, it does eliminate your other creditors and then you would only be left with child support arrears instead. This leaves you more room to manage your debts and financial responsibilities successfully.
There are two consumer chapters within bankruptcy law that you can use. They may not help you to get rid of child support arrears completely, but will still help you set your finances in the right direction so you can meet those obligations.
Understanding Child Support Arrears And Automatic Stay
Filing for bankruptcy stops all collection efforts against a debtor through the provisions of an Automatic Stay. However, this particular provision does not stop you from paying your support obligations such as child support, alimony, and others as they are not subjected to the provisions.
Garnishments or wage orders that are still being deducted due to child support will not be affected by filing for bankruptcy.
How to Get Out of Paying Child Support Arrears Through Chapter 13 Bankruptcy
Under Chapter 13 bankruptcy, child support claims have higher priority than taxes. Thus, the support obligations should be paid in full within the period specified under the Chapter 13 bankruptcy repayment plan.
Your repayment plan allows you to follow a payment schedule based only on the disposable income that you have. Thus, you can ensure that you only pay what you can afford, as the debt will be reorganized and rescheduled so that you can pay monthly payments throughout the entire plan.
Under the law, you are required to pay off your outstanding child support arrears in full amount within the designated repayment period. Moreover, earnings are considered the property of the bankruptcy estate and creditors cannot collect child support from your earnings unless they ask permission from the court.
This type of bankruptcy allows you to repay your past overdue support before unsecured creditors and tax claims.
If you are behind in terms of paying child support, this type of bankruptcy allows you to repay your past delinquent child support arrears. This allows you to regain control of your support obligations, especially those that you haven’t paid within the past three to five years. The best thing about this type of bankruptcy is that it avoids garnishment of your wages for the overdue child support that wasn’t paid.
It is important to note that if you do not follow the current repayment scheme throughout the entire schedule of the reorganization plan, the court can lift the automatic stay. This then allows your creditors to go after you and collect your post-bankruptcy earnings.
On the other hand, once your re-organizational plan is over, you need to certify that you are current in making payments on your child support before you get discharged. If you miss a payment, it is essential that you pay them before you get discharged from the debt.
Child Support and Chapter 7 Bankruptcy
Just like Chapter 13 bankruptcy, filing for Chapter 7 will have no effect on child support claims. Under this type of bankruptcy, all assets such as money, possessions, properties, and interests are owned by the estate.
Everything that you earn after filing for bankruptcy is not considered the estate’s property, so it does not affect ongoing child support as most child support obligations are paid using current or future incomes.
This means that any property, funds or assets collected after your bankruptcy was filed become fair game to anyone who wants to collect child support from you, even if you are still covered by Chapter 7 bankruptcy. And so, if you file for Chapter 7, it will not have a lot of impact on your child support obligations.
In fact, child support debts get special treatment under this type of bankruptcy and are not dischargeable. Child support of any kind will not be removed by filing this type of bankruptcy.
Should You File Chapter 7 Or Chapter 13?
Now that you understand the different kinds of bankruptcy as they relate to child support arrears, it is time that you choose which one is best for your situation.
Although both have their limitations, one is always better than the other for each specific situation. You will get better results on paying child support arrears if you file for a Chapter 13 bankruptcy. However, if you opt for this direction, make sure that you follow the repayment and reorganizational plan meticulously and eventually get discharged from bankruptcy.
Bankruptcy & Child SUpport
To learn more about bankruptcy and child support, it is important that you are armed with the right knowledge. Although the two types of bankruptcies were discussed in detail in this article, there is nothing better than to ask someone who is knowledgeable about the topic.
Reaching out to qualified bankruptcy lawyers can help you decide whether filing for bankruptcy (and which type) is your best option, especially if you want to address your child support obligations and still reduce your debt significantly at the same time.