Bankruptcy and Child Support
Bankruptcy can help you with a lot of things. It can help you stop calls from debt collectors. It can help you get a handle on debt that continues to grow even though you are not making any purchases. And it can help you make a positive change to your financial situation once and for all. But what about bankruptcy and child support? Can it help you if you’re behind on payments? Maybe, but it’s not a simple answer.
Child Support is a Non-Dischargeable Debt
It’s fairly common knowledge that discharge isn’t an option for certain debts when you file for bankruptcy. Child support debts are among those debts. If you must pay child support there is nothing a bankruptcy can do to end that obligation. Child support is a court-ordered obligation and only a court order directly related to the original order to pay can change whether or not and how much you must pay.
Some people hope that if they are behind on their child support payments, bankruptcy will help them eliminate what you owe. After all, back child support payments are a debt?
Unfortunately, this is not the case. Filing for bankruptcy will not change what you owe in child support. It’s a debt that you are not going to get out of paying. And if it goes unpaid, it will continue to add up regardless of what you’ve done to put an end to accumulating debt. In addition to not changing what you owe, unpaid child support can also lead to wage garnishments, interest charges, and suspension of some of your rights.
Despite there being no easy solution when it comes to child support obligations, there are still benefits that occur when you file for bankruptcy.
What do bankruptcy laws have to say about child support?
Bankruptcy and Child Support and Other Domestic Support Obligations
The bankruptcy code addresses domestic support obligations, including child support and alimony. They exist under another legal decree or settlement aside from bankruptcy. Therefore, filing for bankruptcy does not change the essence of the child support agreement.
Child support and other domestic support obligations are considered priority debts. This means the court gives them preference when determining how to divvy up your money. If liquidation occurs, the money will be applied to debt linked to unpaid child support payments before other creditors are paid.
In Chapter 13, any payment plan needs to take into account how much is owed in back child support payments. Ongoing child support obligations are part of your set expenses. You must pay them.
How Can Bankruptcy Help You?
You might be wondering if it’s even worth filing for bankruptcy if child support is your primary debt obligation.
The answer is “It depends.”
If child support is the only thing you owe and you just don’t have enough income to meet your obligations, bankruptcy isn’t going to help. You’re better off speaking to a lawyer about having your child support agreement altered. This would be the case if child support payments were ordered based on income that has changed. For example, let’s say you’re unemployed or you’ve got a lower-paying job. In this case, you’ll need to ask the court to re-apply the formula to determine how much you owe now.
However, if you are dealing with debts other than child support, bankruptcy could be helpful. For instance, let’s say you owe $10,000 on a credit card and $5,000 on medical debt. That’s in addition to your living expenses and what you are obligated to pay in child support each month. You know you must pay the first two debts or risk ruining your credit and having those loans go into default. Those monthly payments make it difficult to afford your child support payments or living expenses each month.
Bankruptcy Frees Up Money to Pay Child Support
In this case, bankruptcy could result in a discharge of $15,000 worth of debt. That means you’ll have the money to meet your child support obligations without concern. It could also mean, under Chapter 13, that a payment plan gets the amount owed on each of those first two debts set without penalties. You’ll end up with a budget that you can stick to each month that helps you pay everything on time and without penalty.
If you’d like to know more about how filing for bankruptcy can help you with child support obligations or you need tips on better managing an out-of-control debt load, we can help. Contact us at the Law Office of Robert M. Geller at 813-254-5696 for more information.