Bankruptcy's Affect on Child Support
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Bankruptcy's Affect on Child Support
In situations where spouses get divorced and a court issues an order requiring the spouse to pay child support, the spouse may later find himself or herself unable to make these payments. Typically, he or she will respond by filing for consumer bankruptcy. However, bankruptcy typically has very little effect on child support obligations.
Can a Bankruptcy Petition Discharge Past Due Child Support Obligations?
Filing for bankruptcy protection will not allow your ex-spouse to discharge any past due child support obligations. In bankruptcy, child support is a non-dischargeable debt.
However, a bankruptcy petition will automatically stop any collection activities on a child support order (called a "bankruptcy stay"). The result is that child support cannot be collected from your ex-spouse until the stay has been lifted by a court.
Are There Types of Cases Unaffected by a Bankruptcy Stay?
A bankruptcy stay does not affect paternity cases or cases seeking orders (or modification of orders) concerning alimony, maintenance, or support from property that is not property of the bankrupt estate.
Can the Bankruptcy Stay Be Removed?
Yes. Bankruptcy courts can lift the stay. Typically, the court will only lift the stay for one creditor rather than remove the debtor’s entire protection. Domestic support creditors usually do not need to ask for relief from stay because alimony, child support, and paternity are not affected by the support. However, if a domestic support creditor needs relief from stay and the creditor is not already exempted, the creditor can ask for relief.
When Will Child Support Be Paid in Bankruptcy?
Child support, as a form of domestic support, is the first priority debt. This means that child support will be paid after the bankruptcy court and the secured debtors are paid. Child support will be paid before the bankruptcy trustee, employees, taxes, and credit cards. This priority applies whether it is Chapter 7 or Chapter 13 bankruptcy.
Note that "domestic support" includes support collected by any entity. Ex-spouses typically collect child support on behalf of their children. However, government agencies such as child welfare services can also invoke the domestic support priority in bankruptcy. If a parent owes money to a government agency because the agency is somehow responsible for the child, then the government agency will be assured payment as well.
Can My Former Spouse Discharge His or Her Child Support?
There is a small possibility. Domestic support obligations are non-dischargeable. Some debtor’s attorneys have started calling such payments domestic property instead. Domestic support obligations are the social responsibilities parents have to their children or ex-spouses have to each other.
In contrast, domestic property is the property that ex-spouses divide between themselves when they file for divorce. One spouse might offer to let the other spouse keep the house in exchange for the cars. These are domestic property exchanges and it is uncertain if courts will create an exemption to the non- dischargeability of domestic support obligations this way.
Do I Need an Attorney?
Even though your ex-spouse's bankruptcy case may not have any long-term effect on child support payments - and may even make it easier for him or her to make them (because he or she will not have as much other debt) - it will complicate enforcement in the short term. Since there are legal procedures that must be followed in order to lift the stay regarding the child support payments, it is recommended that you hire an experienced bankruptcy attorney.
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Last Modified: 05-13-2014 02:31 PM PDT
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