What Happens to Child Support in the Bankruptcy Process?
In Chapter 7 and Chapter 13 bankruptcy cases, different types of debt are handled in different ways. Although child support cannot be discharged by completing the bankruptcy repayment plan, it may successfully help you catch up on payments.
Below we have laid out some important information about priority debts and how child support is treated in Chapter 7 and Chapter 13 bankruptcy cases.
Child Support & Other Priority Debt
Priority debt is a term that the court uses to identify payment obligations which take precedence over other types of debt, such as credit card debt, personal loans, student loans and back rent. In Ohio, and all other states, family support is considered priority debt. This includes child support and alimony. As long as the child support agreement was made in court or by a child welfare agency, the debt will not be discharged in the bankruptcy case.
This type of debt must also be paid back before any other debt. For this reason, a bankruptcy trustee may determine that the best way to collect late child support payments is through the liquidation of non-exempt assets. After property or possessions have been sold, the trustee will ensure that priority debt is repaid before unsecured debt.
Child Support in Chapter 7 Cases
When you file for Chapter 7 bankruptcy, an automatic stay is put in place to protect you from credit collectors. This stay does not apply to debt like child support, however.
Even after filing for Chapter 7 bankruptcy:
- Child support debt and payments are not discharged.
- You can receive legal child support orders and be subject to collection proceedings.
- Throughout the bankruptcy proceedings, you will still be required to make child support payments.
Child Support Debt is Not Discharged
As a type of priority debt, child support is not wiped out by declaring Chapter 7 bankruptcy. You will be required to make up any missing payments owed from the past.
Bankruptcy Does Not Stop Child Support Orders or Collection
If you have recently filed for Chapter 7 or are working through the process of bankruptcy, this doesn’t prevent the other parent from filing a new child support order. It also does not inhibit legal action to collect outstanding payments. Creditors can still go after your property. In order to recuperate unpaid child support, your property may be seized.
Child Support Must Be Paid During & After Bankruptcy
You must also continue to make payments during the bankruptcy case, after it has been closed and after other debt has been discharged. Unlike Chapter 13 cases, in Chapter 7 bankruptcy, creditors can also continue to collect child support payments from your post-bankruptcy earnings.
Child Support in Chapter 13 Cases
Payments and debt related to domestic obligations are treated similarly in Chapter 13 cases. When you file for Chapter 13 bankruptcy, there is also an automatic stay which helps protect you from credit collectors. The difference is that this stay doesn’t prevent all child support debt collection methods.
In Chapter 13 cases:
- This type of debt is not discharged during the bankruptcy process.
- You can receive legal child support orders and be subject to property collection proceedings.
- Throughout the bankruptcy proceedings, you will still be required to make child support payments.
- You must be current on child support payments to receive debt discharge.
The main advantages to filing for Chapter 13 is that the automatic stay provides more protection for debtors and the bankruptcy process can help you get up to date on child support payments.
Child Support Debt is Not Discharged
Just like with other forms of bankruptcy, unpaid child support is not eliminated even when the Chapter 13 repayment plan has been completed and other debt is discharged.
Child Support Must Be Paid During & After Bankruptcy
If you owe child support at the time you file for Chapter 13, this amount will be included in the repayment plan. Throughout the bankruptcy process, even if it includes making up for back pay, you will be expected to continue making regular child support payments. Debtors who stop making child support payments during the bankruptcy process may have the automatic stay nullified and be pursued by creditors.
Child Support Must Be Current to Get Debt Discharged
In order to successfully have the debt discharged once the Chapter 13 repayment plan is completed, you must be current with child support payments.
Chapter 13 Bankruptcy Can Prevent Collection From Earnings
Unlike Chapter 7 cases, in Chapter 13 bankruptcy the automatic stay doesn’t entirely protect debtors from creditors trying to collect. In these cases, earnings are considered part of the property in the bankruptcy estate. For this reason, creditors need a court order to collect child support from post-bankruptcy earnings.
Fortunately, you won’t need to worry about this if you follow the Chapter 13 repayment plan and continue to make family support payments on time.
Chapter 13 Can Help Get Current With Child Support Payments
This type of bankruptcy is advantageous because it can help you catch up with late payments. The Chapter 13 repayment plan includes and prioritizes child support debt. It will be designed to pay off that amount owed completely. This usually means that a higher amount of less important unsecured debt will be discharged in the end.
Read Can You File for Divorce & Bankruptcy at the Same Time? for more reliable legal advice.
Get Assistance for Navigating Your Legal Issues
In Ohio, when family law and bankruptcy law cross paths, cases can get quite complicated. Find a bankruptcy lawyer who you can trust to look out for your interests and guide you through these tough issues. Call the offices of Amourgis & Associates at (844) 218-2721 to request a consultation, or contact us online.
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