Bankruptcy and Child Support Obligations

One smart thing our Congress did was establish statutory law with regards to bankruptcy. Bankruptcy is a federal process and debts that are considered “priority” can not be discharged under Chapter 7 or Chapter 13 proceedings.

Student loans, child support, federal taxes, and certain criminal fines can not be discharged under bankruptcy.

So, while certain obligors may have thought this was a good way out, this will backfire. Pre-bankruptcy child support arrears must be included and paid off in a chapter 13 plan.

But for a debtor, owing child support may actually help in Chapter 13 as paying the child support debt may reduce the amount of repayment owed for other unsecured debts. This can help discharge other unsecured debt like credit cards sooner in the plan.

In bankruptcy, there is an “automatic stay” to stop collection actions against the filer. This can prevent eviction, foreclosure, even forestall a conviction for contempt in child support proceedings. However, the automatic stay does not prohibit collection efforts for child support debt that is not part of the bankruptcy estate. Post filing earnings in chapter 13 are considered the property of the estate and to collect current child support you will have to file a relief from the stay to collect on these wages.

The best course of action if you are owed child support from someone who is filing either Chapter 7 or Chapter 13 is to stay calm.

Arrears can not be discharged and will not go away. Your obligor cannot receive a discharge of debt without paying the arrears.

But to keep the current payments coming in from the post-filing earnings you may need to again, perform your due diligence to see how the federal laws will affect a family law situation in the state where you live. You need to find out how the child support debt and current obligation will be treated in court and if you need to file for relief or have your state agency file a motion for relief from the stay to continue to collect your child support.

Stay calm and get paid!