How Does Bankruptcy Affect Child Support Payments?

Filing for bankruptcy can help you get back on your feet after falling into debt. Bankruptcy can reduce or eliminate some of your debts and obligations. However, bankruptcy doesn’t discharge all types of debt. Child support, alimony, and most student loans are not dischargeable in bankruptcy.

There are alternatives to bankruptcy for parents who fall behind in child support arrears. Child support laws are different depending on where you live. To understand the impact of bankruptcy on child support obligations, talk to a local child support lawyer.

Understanding Bankruptcy and Child Support

Bankruptcy is a legal process to get debt relief from creditors. Bankruptcy options include liquidating assets to pay off creditors and debt repayment plans. After the bankruptcy process, individuals will have their remaining debts discharged so they can make a new start.

Bankruptcy can depend on the type of filing and source of the individual’s debt. The most common forms of debt for individuals include credit card debt, mortgages, auto loans, and student loans. However, bankruptcy discharge does not apply to all types of debt. Bankruptcy will generally not eliminate child support debts. After bankruptcy, the noncustodial parent is generally still liable for child support arrearages.

Child Support Is Not Dischargeable in Bankruptcy

You cannot discharge court-ordered child support payments in a bankruptcy filing. You must list all debts, including child support arrears, in your bankruptcy schedules, even though they cannot be discharged.

Both state and federal courts recognize child support payments as a priority debt. Parents must financially provide for their children, and bankruptcy cannot change that. The custodial parent uses child support money to provide for the child’s basic needs. Eliminating child support in bankruptcy is not in the best interests of the child.

• Child support debt takes priority over other priority debts and unsecured debts
• If you owe back taxes and back child support, you’ll be required to pay your child support first
• Chapter 13 bankruptcy filings require child support debt to be repaid to the other parent in full through a repayment plan before discharging other eligible debt

Bankruptcy filings go through federal court, but different states have different rules for bankruptcy assets. Talk to a personal bankruptcy attorney for legal advice about child support treatment under the bankruptcy code.

Automatic Stay on Collections

Filing Chapter 7 or Chapter 13 bankruptcy puts an automatic stay on collection actions. This gives you a break from debt collectors and collection efforts. However, child support collection actions can continue. Family court actions to establish and enforce child support orders can also continue.

Impact of Chapter 7 Bankruptcy on Child Support

Which type of bankruptcy you file for may make a difference in how the court determines your child support obligations. The most common types of bankruptcy filing for individuals are Chapter 13 and Chapter 7 bankruptcy.

With Chapter 7, the bankruptcy court appoints a bankruptcy trustee to sell any nonexempt assets and give the money to creditors. After the process is over, dischargeable debts are cleared. However, this does not include debts for child support, spousal support, and most government debts.

Income earned after your bankruptcy filing may be used to determine your financial obligation for child support. The courts also may order you to use that income on back child support payments you owe to the other parent. In a Chapter 7 bankruptcy filing, income earned after filing is not considered part of the bankruptcy estate.

Impact of Chapter 13 Bankruptcy on Child Support

Chapter 13 bankruptcy uses a repayment plan to pay off a portion of the debt over time. Qualifying debts are discharged, but this generally does not include child support debt.

A Chapter 13 filing includes earned income in the bankruptcy estate. That means if you earn more while you are in the middle of your debt repayment plan, you may have to pay back more of your debts.

Any party seeking repayment must receive court approval. The courts are more likely to approve a request for recovery of support if the parent who filed is already behind on child support payments.

Alternatives to Bankruptcy for Parents in Debt

In some states, you can settle child support debt owed to the state. Some states have debt compromise policies for child support owed to the state.

Settling child support arrears owed to the other parent can depend on state law. Settling child support debts generally requires approval from the court. You can negotiate with the other parent to accept a payment plan or lump-sum payoff to settle back child support. Settling child support and other creditor payments is a way to avoid bankruptcy filing.

Modifying Child Support Orders

If you are having financial trouble, it does not affect your child support obligations. You have to get court approval to modify the court order before it will change your ongoing child support payments. The court can modify child support based on a significant change in circumstances. Possible reasons to modify child support include losing your job, a medical emergency, or a change in child custody.

Legal Actions for Unpaid Child Support During Bankruptcy

The custodial parent can take enforcement action for unpaid child support. Child support enforcement actions are not stayed during bankruptcy. Enforcement actions include wage garnishment, bank account levies, and intercepting income tax returns. However, it may be difficult to get money from the other parent if they don’t have any assets.

When the other parent files for bankruptcy, they have to disclose all financial obligations. Financial obligation disclosures include child support debt. Generally, the bankruptcy trustee will give notice of a bankruptcy filing to your state child support agency. Your child support services should send a proof of claim to make sure the trustee is aware of child support obligations.

Talk to a bankruptcy lawyer for any questions about bankruptcy filings and family support obligations. For information on collecting unpaid child support during bankruptcy, talk to a child support attorney for legal advice.