If you owe child support arrears you may be wondering, “Can I wipe out my child support debt through bankruptcy?” We decided to dedicate a post to this subject because it comes up a lot. While Chapter 7 and 13 bankruptcy can impact many types of debts, legislators decided that child support was too important to erase in a bankruptcy. Read on as we go into further detail.
Let’s say you file a Chapter 7 bankruptcy. While the automatic stay stops many types of creditors dead in their tracks, that is NOT the case with many child support actions. The automatic stay will not delay or stop actions to collect child support from assets that are not a part of your bankruptcy estate.
For example, post-bankruptcy earnings (income earned after you file for bankruptcy) are not part of your bankruptcy estate; therefore, child support creditors can go after them while your bankruptcy is pending in the courts. Why is child support treated differently? It’s because it’s considered a “priority debt.”
Priority Debts Are Not Dischargeable
You cannot discharge priority debts, such as child support, spousal support, court-ordered fines, and most student loans in bankruptcy. So, if you file a Chapter 7 and you own any money in back child support, it will not be discharged in the bankruptcy. As a result, you cannot include child support arrears in a Chapter 7. However, this does not mean a Chapter 7 cannot improve the situation.
Since bankruptcy does not diminish your responsibility to pay child support, it can help by wiping out other debts, such as credit card debt, medical bills, taxes of a certain age and personal loans, thereby freeing up income so you can put it toward child support.
What About Chapter 13 Bankruptcy?
If you owe child support arrears and you file Chapter 13 bankruptcy, it will be included in your Chapter 13 repayment plan. The benefit to this is your child support obligation can reduce the amount of money you would have to pay other unsecured creditors, such as credit card companies. Since most non-custodial parents would rather see their money go to their children rather than credit card interest and late fees, filing a Chapter 13 can actually help parents get caught up on past-due child support while discharging more of their unsecured debt.
To learn more about how bankruptcy can help you, contact a Rancho Cucamonga and Mission Viejo bankruptcy attorney from Nguyen Law Group!