If your child support payments are behind, filling for bankruptcy will not get rid of your obligation. You will still be required to keep making current payments during the bankruptcy process, but bankruptcy may help you get caught up on any back payments on child support you may owe. Keep reading to learn how to deal with child support during a bankruptcy.
Child Support and Chapter 13 Bankruptcy
Congress believes that child support is much too important to be discharged away in a bankruptcy filing. Because of this, Chapter 13 bankruptcy treats child support back payments that are due as a debt priority that cannot be erased by a bankruptcy discharge. You will have to pay off any back payments that are due through your Chapter 13 repayment agreement.
A huge benefit of a Chapter 13 is that it will make it so you can reorganize your debts and pay them back through an easy payment plan. All child support back payments will be included in this plan. In many instances, having to pay child support can possibly reduce the amount you would have to pay to your unsecured creditors. You probably would rather give the money to your kids than the credit card company anyway, and Chapter 13 can help you get caught up on that and discharge more of your unsecured debt at the same time.
The automatic stay does not stop child support collection efforts from trying to get the money owed from any property that is not part of the bankruptcy estate. Your earnings are property of the bankruptcy estate and a creditor has to get permission from the court before starting an action to get child support from your post-bankruptcy earnings.
You have to keep making current payments on time as they come due. If you stop paying during the Chapter 13, the court can lift your automatic stay and your creditors can come after you even if your earnings are bankruptcy estate property. Before you can get the Chapter 13 discharge, you have to certify that you are current on all support payments.
Chapter 7 Bankruptcy and Child Support
When filing for Chapter 7 bankruptcy, the automatic stay will usually stop your creditors from harassing you to collect the money you owe them. The exception to this rule is child support. The stay doesn’t stop or delay any lawsuit to collect child support from property that is not included in your bankruptcy estate.
Property you obtain after you file for bankruptcy is not part of the bankruptcy estate. This usually includes wages earned after your case has been filed. Since post-bankruptcy wages are not included in the bankruptcy estate, child support attorneys are free to attack them during your bankruptcy.
As with Chapter 13, Chapter 7 bankruptcy doesn’t affect your obligation to keep making your child support payments since child support is a priority debt. If you get behind, the automatic stay will not help to keep you from getting sued for child support. The way Chapter 7 can help is by wiping out your other obligations and freeing up more of your money to get caught up and stay current on your child support.
Also, if you have nonexempt assets, the Chapter 7 trustee can sell them and divide the money among the creditors. Not all creditors are treated equally in bankruptcy. It depends on what type of debt it is and the amount available to distribute to them. Priority debt gets paid first before things like medical bills and credit cards. Child support even gets paid before other priority debts such as taxes. So if you have nonexempt assets, Chapter 7 will help the child support to get paid without having to file a separate lawsuit to collect it.
