Bankruptcy has little effect on child support. Specifically, if you owed support before you filed for bankruptcy, you'd still have to pay it after filing. Likewise, if you were behind on your payments, you’d still owe the arrearages after a Chapter 7 bankruptcy. Even though bankruptcy won’t get rid of a child support obligation, it can give you time to pay arrearages. In a Chapter 13 case, you can stretch out the back support over a three- to five-year repayment plan.
What Is a Domestic Support Obligation?
Child support has a special “priority” status in bankruptcy. It isn’t dischargeable (wiped out), and, if money is available to pay creditors, it’s first in line for payment. That’s right—it gets paid before all other debts.
But that’s not all. Child support receives further protection.
Unlike most debts, the automatic stay—the order that prevents creditors from collecting debts—doesn’t work against child support. You’ll remain responsible for your monthly payment throughout your case.
You can tell whether child support is a “domestic support obligation” with priority status because it will meet the following criteria:
- It came about through a separation agreement or divorce.
- You owe the debt to a spouse, former spouse, or for the benefit of a child.
- Its purpose is to support a spouse, former spouse or child.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy quickly wipes out qualifying debt—such as credit card balances, personal loans, and medical bills—within a matter of months. But it doesn’t discharge everything. You’ll remain responsible for nondischargeable debts after your case—and child support is a nondischargeable debt. Not only will you still have to make the ongoing payment, but it can continue to be deducted from your paycheck.
If you owe back child support, and funds are available to pay toward your debt, the bankruptcy trustee—the official responsible for overseeing the case—will pay the child support first. (Either the person who is supposed to receive the child support, or the child support enforcement agency, will file a claim telling the trustee how much is owed.)
In this situation—meaning when you have to give up property—you’ll benefit from the property sale. The sales proceeds will be used to pay down the priority arrearage—a debt that you’ll remain responsible for after the case. Another benefit of is that even though support won’t get discharged, getting rid of your other debts in a Chapter 7 case can make it easier to make your future payments.
Chapter 13 Bankruptcy
A Chapter 13 case can be a good way to catch up on back support—if you can afford it. For some, it isn’t feasible because a priority debt—such as child support arrearages—must be paid in full in a Chapter 13 plan. Before the court would approve your plan, you’d have to show that you have enough income to do the following:
- cover monthly living expenses
- continue to make your monthly support payment
- pay off support arrearages in the three- to five-year plan, and
- pay other amounts required by the plan.
You won’t be able to receive a discharge at the end of the case without certifying that you’re current on your child support payment. You should talk to a knowledgeable attorney to determine whether a Chapter 13 case will be a good option for you.
Questions for Your Attorney
- If I file a Chapter 7 bankruptcy, will funds be available to pay down my support arrearages?
- Can I afford a Chapter 13 plan?
- Can I wipe out debt in a Chapter 7 case before paying my support obligation through Chapter 13 bankruptcy?