How Does Bankruptcy Affect Child Support Obligations?

If you are a parent paying child support to your child’s other parent and are considering filing for bankruptcy, you might be wondering how bankruptcy will affect your child support obligations. Or, if you are a parent receiving child support from your child’s other parent, you might be wondering how your co-parent’s bankruptcy filing will affect child support payments. While bankruptcy can offer relief from certain debts, it does not absolve individuals from their child support obligations. Below is a look at what parents should know about child support and bankruptcy.

Types of Bankruptcy

There are two main types of individual bankruptcies: Chapter 7 and Chapter 13 bankruptcies. When discussing child support and bankruptcy, it is crucial to understand the difference between these two types of bankruptcies.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is also called liquidation bankruptcy. For a person to qualify to file Chapter 7 bankruptcy, their income must be below the median for their state, or in other words, they must pass the means test. With this option, the bankruptcy trustee sells nonexempt property to pay off creditors. Chapter 7 bankruptcy typically takes a few months and results in the discharge of many unsecured debts. After liquidation and distribution, most of the remaining unsecured debts are discharged.

However, past due child support or child support arrears cannot be discharged under Chapter 7 bankruptcy. After the trustee sells property that cannot be protected with bankruptcy protections, they will apply the funds to the child support obligation. Even if an individual completes a Chapter 7 bankruptcy case and receives a discharge, they will remain responsible for any child support arrears and all future payments.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy or reorganization bankruptcy involves developing a repayment plan to pay off debts within a specific period. With this option, debtors can keep their property but must ensure creditors get at least the value they would have received in a Chapter 7 bankruptcy. Just as with Chapter 7 bankruptcy, past child support cannot be discharged in a Chapter 13 bankruptcy. However, Chapter 13 bankruptcy may offer some flexibility in managing child support payments. Child support payments can be included in the repayment plan, but these payments must be prioritized. Child support arrears must be paid off before any other unsecured debts are paid off.

Child Support Is Considered a Priority Debt

Child support is non-dischargeable in bankruptcy and is also considered a priority debt. Priority debts receive special treatment in bankruptcy. These debts get paid off before other types of debts, such as medical bills or credit card debt. The Bankruptcy Code recognizes the importance of child support payments and, therefore, protects these payments. If a parent fails to comply with child support payments, it can result in severe consequences, including the dismissal of their bankruptcy case.

Even the automatic stay that halts collection actions by creditors does not apply to child support payments. The automatic stay cannot affect actions to establish or modify child support, nor can it affect efforts to collect child support payments.

Contact Our Deerfield Beach Bankruptcy Lawyer

If you are considering bankruptcy, contact our Deerfield Beach bankruptcy lawyer at the Law Office of Adam I. Skolnik, P.A., for guidance on how bankruptcy affects child support and other debts.