When someone accumulates more debt than they can handle, they may look to file for bankruptcy to restructure and even discharge some of the funds they owe to others. The U.S. Bankruptcy Code gives both business and individuals federal legal protections, as well as the opportunity to pay off a portion of their debts.
But while you may be able to avoid paying some of your obligations, there are certain debt categories that cannot be wiped away by a bankruptcy filing. Child support obligations are one of them.
What Are the Options for Individual Bankruptcy?
Most individuals will file for bankruptcy protections under Chapter 7 or Chapter 13 of the Bankruptcy Code. Chapter 7 is generally utilized by people with limited incomes who do not have the ability to pay back all or a certain portion of their debts. The court will appoint a trustee to organize and prioritize the debts, take an inventory of the debtor’s property, and sell certain qualified property to pay at least some of the debt.
Chapter 13 bankruptcy is referred to as a reorganization bankruptcy. Property is not sold when you file for Chapter 13 protection. If you successfully complete a court approved repayment plan, you may be able to keep some, if not all, of your property. With both types of bankruptcy, if you follow court orders and make payments when directed, at the end of the process all unsecured debts are discharged (in other words, forgiven). But not all debts are dischargeable.
What is Dischargeable vs Non-Dischargeable Debt?
While most unsecured debts like credit card and medical bills may eventually be discharged, there are some debts that may not be discharged, no matter the Chapter you are filing under. These include:
- Certain state and federal taxes
- Fines levied by government agencies
- Student loans (with a few rare exceptions)
- Personal injury judgments for injuries sustained while debtor was driving drunk
- Debts owed to tax-advantage 401k and other retirement plans
- Debts owed to cooperative housing organizations (for example, a homeowners association)
- Court levied fines, including criminal restitution orders
- Spousal support and any attached attorney’s fees
And, of course, this includes child support. As with court ordered spousal support, the law makes it a public policy point to make sure no one avoids their obligations to minor children, even under bankruptcy circumstances. Even property that may be exempt from sale under federal law may be seized and sold to ensure these obligations are met.
What is the Priority of Unpaid Child Support in Bankruptcy Proceedings?
Any debts for unpaid spousal support and child support will be very high on the list of priority debts during the bankruptcy process. In fact, it will be higher on the list than even unpaid taxes. In addition, attorney’s fees attached to either one of the legal obligations are nondischargeable, although the unpaid support must be taken care of first. If you cannot pay the amount immediately, that does not mean that the debt disappears. However, the type of income that qualifies for bankruptcy purposes does depend on the chapter.
If you file for bankruptcy under Chapter 7, any income earned after filing is not considered part of the bankruptcy estate, and can be considered in determining child support obligations and used to pay child support in arrears. In a Chapter 13 bankruptcy, any income earned before or after filing is considered part of the bankruptcy estate.
Anyone seeking to impose a support obligation must request relief from the stay that the court places on that person’s property. If a person who filed for Chapter 13 bankruptcy is already subject to a child support order and fails to make support payments, the court will usually lift the stay temporarily so that child support can be recovered.
Can Child Support Be Modified after Filing for Bankruptcy?
Under bankruptcy circumstances, it is extremely unlikely that your child support order will be modified. Once again, public policy is to support minor children, no matter the circumstances.
However, a non-custodial debtor can seek child support modification through the standard family court procedures. They must prove that there is a substantial change in circumstances that makes regular child support payments extremely difficult. A bankruptcy filing in itself does not qualify as long as the debtor still has a job.
Do I Need a Lawyer for My Bankruptcy and Child Support Issues?
If you are facing a bankruptcy, or are the custodial parent of a child with the other parent facing bankruptcy, there is a lot at stake. Make sure your rights are protected by seeking the advice of a family law attorney that has experience dealing with complicated child support matters. They can walk you through any legal processes, advise you of your rights, and be your advocate every step of the way.