One of the greatest fears that people must confront while dealing with debt is worrying that they won’t be able to provide for their families. Depending on the type of debt, your creditors may be willing to work with you to create a payment plan or even forgive some of what you owe. However, child support must be paid in full, on time, each month. You may wonder what filing bankruptcy means for child support responsibilities, particularly if you’ve fallen behind on your payments. Each situation is unique, but we’ll work together to create a plan that’s just right for your circumstances, and I’m always available to answer any questions that may come up.
Chapter 7
If you owe money on unsecured debts, it’s ok to stop making these payments once you file bankruptcy and the automatic stay begins. This relief does not apply to child support payments or court proceedings to establish or modify child support orders, however. Additionally, past due child support may not be discharged through a Chapter 7 bankruptcy. One of the trustee’s duties in a Chapter 7 is to assess your property values to determine if anything can be sold to repay your creditors. They also determine the priority order of payments, with child support always considered a priority debt that must be paid in full. All of your income you receive after filing your case that is not included in your bankruptcy must go toward keeping current on child support payments. Ignoring this debt could lead to a lawsuit.
Chapter 13
If, after conducting the Means test, we determine that a Chapter 13 is the best fit for you, your past due child support may be included as part of your repayment plan. When we set your budget, we’ll ensure that you have enough income to cover your full monthly child support payments plus any arrearages spread out over the 3-5 years of your plan. Paying child support not only takes care of your children, but can also improve your situation by reducing the total amount of debt you’ll pay during the Chapter 13. Your priority debts must be paid in full, and your remaining disposable income goes toward other debts. If there is no income left, you could end up paying nothing toward your unsecured debts.
Over the several years of your repayment plan, your income is considered part of your bankruptcy estate, and the court could issue a relief from the automatic stay if you fall behind on child support payments. You’ll need to get up to date immediately to avoid your child support debt going to collections. If you aren’t caught up by the end of your repayment period, your other debts may not be discharged, and your case may not be completed.
Making a New Start
If your child support payments were based off of your previous income and your situation has changed significantly, we may be able to ask the court to modify and reduce your payments to better fit your new circumstances. Using a Chapter 7 to discharge your other debts may also leave enough room in your budget to make your child support payments more manageable. Let’s get together to discuss your options to get your debt under control so that you can focus on providing and caring for your family.