As both family law and bankruptcy attorneys, we often see cases that integrate aspects of both disciplines. One such situation involves the issue of making child support payments during or after bankruptcy.
In short, if you are responsible for making child support payments, bankruptcy won’t wipe out what you owe – either now or in the future. Still, the bankruptcy process will help your overall financial position and make your obligation easier to fulfill. For those facing this situation, there are a few things it is necessary to understand.
An automatic stay won’t stop the accrual of child support or delay most family law proceedings.
- The appointed bankruptcy trustee must report child support obligations and status.
- Child support arrearages have priority when there are available finances to pay creditors.
- In Chapter 7 bankruptcy, the filing party remains responsible for child support after the case closes.
- In Chapter 13 bankruptcy, the filing party will pay off back child support over three to five years while remaining responsible for current payments.
Bankruptcy Doesn’t Affect Child Support Payments
Filing for bankruptcy debt collection efforts by most creditors. Once the automatic stay goes into effect, a creditor must ask the court before initiating a collection action (or continuing a current collection effort.)
However, the automatic stay doesn’t apply to:
- legal proceedings to create or change a child support order
- collection of child support from property not part of the bankruptcy estate
- income withholdings to pay child support under a court order or statute.
Trustees Are Required to Report Child Support Obligations
At the 341 meeting of creditors, the trustee will ask an individual owing child support to complete a form providing current address, last or current employer’s address, and information about support obligations.
The trustee will inform the holder of the domestic support order of their rights and the availability of child support collection services. All relevant parties will also receive notice of the discharge and collection information.
Child Support Payments – Chapters 7 and 13
You can’t erase a child support obligation in bankruptcy— this category is considered non-dischargeable. Child support is also a “priority debt” that receives distinct treatment in the bankruptcy process. Child support arrears are paid first if funds are available to pay creditors.
In Chapter 7 bankruptcy, if the Chapter 7 trustee sells any non-exempt property, the proceeds will be applied to the support obligation. Even after the bankruptcy case is complete and discharge is granted, the debtor will remain responsible for any child support balance and all payments that accrue in the future.
In Chapter 13 bankruptcy, an individual can catch up on missed child support payments. All arrears must be paid in full through the Chapter 13 repayment plan, and ongoing child support payments are also required. Before anyone can obtain a Chapter 13 discharge, the individual must certify to the court that they are up-to-date on all alimony and child support obligations.
Because a Chapter 13 plan cannot be structured for longer than five years, excessive child support arrears can result in a substantial monthly payment.
Get the Help You Need
The professionals at the law offices of Richard V. Ellis offer extensive expertise in both bankruptcy and family law. We understand these situations can be complicated and emotional, and having an experienced and compassionate attorney by your side can make all the difference.
Call us today if you are facing bankruptcy and have questions about child support, alimony, or debt repayment.