Most parents put the well-being of their children ahead of all of their other priorities Filing for bankruptcy doesn’t change this. But what happens when you pay or receive child support and bankruptcy comes into the picture? What do you need to know about bankruptcy and child support?
Is Child Support Discharged in Bankruptcy?
Child support, like all court-ordered payments, is a priority debt. Filing for bankruptcy never results in a discharge of child support. Parents responsible for paying must continue to do so when they file for bankruptcy. This includes past due payments, as well as what you owe going forward.
If you are the custodial parent, you should continue to receive payments if your child’s other parent files.
Does Bankruptcy’s Automatic Stay Affect Child Support Payments?
Many people file for bankruptcy just to gain the benefits of the automatic stay. The automatic stay stops the ability of creditors to pursue debt collection, at least temporarily. This is a huge relief for people facing aggressive debt collection efforts daily. Eventually, they might need to repay the debt, but the automatic stay gives them a break to regroup and figure out their next steps.
Unfortunately, or fortunately, if you’re the custodial parent receiving payments, the automatic stay does nothing to prevent the collection of child support payments. The court-ordered obligation of child support remains in place bankruptcy or not.
What is important to understand is how the particular chapter of bankruptcy someone uses affects how the court handles child support issues.
Neither Chapter 7 nor Chapter 13 relieves a parent of their support obligations. However, filing for Chapter 13 makes it a bit more difficult for the custodial parent to collect.
When someone files for Chapter 13 bankruptcy, their income becomes part of the bankruptcy estate for up to five years. The recipient parent must request relief from the automatic stay to collect the money owed. The court lifts the stay in almost every case, but there’s an extra step you’ll need to take if you’re the recipient parent. If you’re responsible for paying, you might get a few extra days or weeks to come up with what you owe while the court works through the case.
You can learn more about the automatic stay and how it affects bankruptcy and child support from this information provided by the Cornell Law School.
Child Support is a Priority Debt
Not only is child support a priority over other debts, but it also takes priority over other priority debts. The court makes sure child support payments are satisfied before other priority debts.
Back child support payments are added to your bankruptcy payment plan in Chapter 13. Current payments are paid out of someone’s income during the three-to-five-year Chapter 13 plan. In Chapter 7, back payments are paid from the liquidated assets.
If you are the paying parent, you’ll need to continue paying, including any back payments owed, going forward after your case wraps up.
An Attorney Helps You Handle Issues with Bankruptcy and Child Support
Understanding how to handle priority debts when you file for bankruptcy is a challenge. For many people, filing means they can fulfill their most important financial obligation – supporting their children. It also means recipient parents are more likely to receive payments that might have been missing.