How Is Child Support Treated by the Bankruptcy Process?
Child support obligations cannot be dismissed under either Chapter 7 or Chapter 13 bankruptcy. Bankruptcy will also not eliminate arrears for anyone who has gotten behind in child support payments. However, bankruptcy may allow someone to catch up on child support payments.
Courts view domestic support obligations, such as child support or alimony, as priority debts. It can also be any type of debt that is meant for support or maintenance of another person. If the child support or alimony was established through a property, divorce or separation agreement by court order or by a child support enforcement agency, the debt is not dischargable in any bankruptcy proceeding.
Child Support and Chapter 7
Under Chapter 7 bankruptcy, an automatic stay keeps most creditors from continuing collection proceedings. However, that stay does not apply to what are known as domestic debts, like child support and alimony. Someone who has filed or plans to file for bankruptcy may still have child support orders filed against them and collection proceedings continue.
Bankruptcy protections do not prevent child support officials from seizing property that is protected during and after the process. Because child support is considered a priority debt, it cannot be discharged during bankruptcy. Anyone who has been ordered to pay child support or alimony must continue to make payments during the bankruptcy process. Priority debts are paid before any other debts, which means the bankruptcy trustee can actually help the child support officer collect past due payments through the sale or seizure of non-exempt assets without the need for an additional legal action.
Child Support and Chapter 13
Just as in Chapter 7 bankruptcy, child support cannot be discharged through the proceedings. However, it is possible that someone who files Chapter 13 bankruptcy could bring their child support up-to-date. In fact, in many states, child support must be paid in full through the repayment plan arranged by the trustee.
Paying child support could actually reduce the amount that must be paid to unsecured creditors since it is a priority debt. A Chapter 13 bankruptcy stay, unlike the one issued in Chapter 7, requires a creditor, even child support officers, from initiating action to collect since all earnings are considered the property of the bankruptcy estate. It is very important to keep child support payments up-to-date throughout the bankruptcy proceedings as the trustee could lift the stay and allow child support officers to seize earnings even though they are property of the estate.
If you have a child support or alimony order that has been issued by a court or enforcement agency, and you are considering filing for bankruptcy, it is critical that you speak to an attorney regarding your situation. Call 1-866-964-6529 or complete our simple contact form to set up a consultation to discuss your situation with an attorney who can provide you with the information you need.