Filing for bankruptcy offers individuals the opportunity to wipe out various forms of debt or to reorganize debt into a more manageable payment plan. Some types of debt, however, can not be discharged in bankruptcy. Filing for bankruptcy will discharge stop child support obligations, for one. Filing for Chapter 13 bankruptcy, however, sometimes allows a parent to turn child support payments into a more feasible payment plan. An experienced bankruptcy attorney can help you determine which option is best for you.
Chapter 7 Bankruptcy and Child Support
Chapter 7 bankruptcy allows a person to liquidate assets to pay off creditors and eventually discharge debt. Because child support is a “priority” debt, however, it can not be discharged through Chapter 7 bankruptcy. Priority debts are obligations that are not secured by collateral but are prioritized among other debts when there are not enough assets to pay a person’s creditors.
Child Support and Chapter 11 Bankruptcy
Chapter 11 bankruptcy involves the reorganization of debt. Under this type of a bankruptcy, a person creates a reorganization plan that takes into consideration factors like assets, liabilities, current income, and expenditures. Reorganization plans must first be approved by bankruptcy courts. Under this type of bankruptcy, child support is also viewed as a priority debt, which is incapable of being discharged.
Chapter 13 Bankruptcy and Child Support
If a person is behind on child support payments, filing for Chapter 13 bankruptcy does not discharge a person’s obligations. Some people discover, however, that Chapter 13 bankruptcy allows them to catch up on child support payments. Much like in Chapter 7, child support payments are viewed as a priority debt and can not be discharged through bankruptcy. During Chapter 13 bankruptcy, a person reorganizes his or her debts and pays back some or all of this amount through a repayment plan. By discharging unsecured debt, many people discover that they have money freed up to pay child support. Unlike in Chapter 7 bankruptcy, however, a creditor must obtain permission from a court before pursuing an action to obtain child support. Provided that a person continues to make timely support payment, a separate action to collect these amounts will likely not arise. If you fail to make child support payments, the court often will allow creditors to garnish your earnings.
What to do if You are Behind on Child Support
If you are behind on child support, there are several steps that you should take:
- Go through documentation and determine exactly what you owe. Many people find it helpful to use a tracking system to monitor their payments.
- Obtain the assistance of an experienced attorney who can be helpful in determining the amount that you owe. It is critical to understand that ignoring back payments will only make your situation worse. Instead, it is a better idea to arrange a mutually agreeable payment plan with the other parent.
- Speak with a knowledgeable attorney to determine the best next steps to take. The penalties associated with failure to pay child support can be particularly severe, which is why it is often to get help and act quickly.
Speak with an Experienced Bankruptcy Attorney
Bankruptcy is not something to be entered into lightly. If you are concerned about mounting child support payments, do not hesitate to discuss matters with an experienced bankruptcy lawyer. Contact attorney Jim A Lyon today to schedule an initial free consultation.