Can a Chapter 13 Plan Help You with Past Due Child Support?

 Posted on June 27, 2024 in Chapter 13

Child support obligations are a serious responsibility, and falling behind can lead to significant legal and financial consequences. If you are having difficulty with overdue child support payments, Chapter 13 bankruptcy may offer a path to regain control of your finances while fulfilling your parental duties. A Texas lawyer can help you determine if this is the best path to take for your circumstances.

What Exactly is Chapter 13 Bankruptcy?

There are different types of bankruptcy, and it is helpful to know which may have the potential to help your situation the most. A "wage earner's plan," commonly known as Chapter 13 bankruptcy, enables individuals with consistent income to establish a three to five-year plan for repaying their debts. Unlike Chapter 7 bankruptcy, which involves liquidating assets, Chapter 13 enables debtors to keep their property while making manageable payments.

How Chapter 13 Can Help with Past-Due Child Support

It is crucial to understand that child support obligations cannot be discharged in bankruptcy. However, Chapter 13 can provide a structured way to address past-due child support while maintaining current payments. Here is how:

• Automatic Stay: Filing for Chapter 13 triggers an automatic stay, which temporarily halts most collection actions. This pause can provide breathing room to organize finances and develop a repayment plan.
• Priority Debt Status: In Texas, as in all states, past-due child support is considered a priority debt. This means it must be paid in full through the Chapter 13 plan.
• Structured Repayment: The Chapter 13 plan allows for the repayment of past-due child support over the plan's duration (3-5 years). This can make catching up more manageable compared to lump-sum demands.
• Protection from Penalties: While in Chapter 13, additional penalties or interest on past-due child support may be frozen, preventing the debt from growing further.
• Maintaining Current Payments: The plan requires staying current on ongoing child support obligations and ensuring the child's needs are met moving forward.

Texas-Specific Considerations

In Texas, the Office of the Attorney General (OAG) is responsible for child support enforcement. When filing Chapter 13 with past-due child support:

• Automatic Stay: The OAG must be notified and included as a creditor in the bankruptcy filing.
• Priority Debt Status: The repayment plan must include the full amount of past-due support.
• Protection from Penalties: While in Chapter 13, additional penalties or interest on
• Maintaining Current Payments: The plan requires staying current on ongoing child.
• Support obligations and ensuring the child's needs are met moving forward.
• Past-due child support may be frozen, preventing the debt from growing further.

Texas-Specific Considerations

In Texas, the Office of the Attorney General (OAG) is responsible for child support enforcement.

When filing Chapter 13 with past-due child support:

• The OAG must be notified and included as a creditor in the bankruptcy filing.
• The full amount of past-due support must be included in the repayment plan.
• The bankruptcy trustee will distribute payments to the OAG as part of the plan.

Potential Challenges

While Chapter 13 can be helpful, it is not without challenges:

• The repayment plan must be feasible based on your income and expenses.
• Failing to make plan payments or current child support payments can result in dismissal of the bankruptcy case.
• Chapter 13 will impact your credit score and remain on your credit report for up to seven years.

Is Chapter 13 Right for You?

Consider Chapter 13 if you:

• Have a steady income.
• Owe significant past-due child support.
• Want to avoid more severe enforcement actions (e.g., license suspension, property liens).
• Need time to catch up on payments in a structured manner.

However, bankruptcy is a serious decision with long-term implications. Before proceeding, it is essential to explore all options and seek professional advice.

Contact a San Antonio, TX Bankruptcy Lawyer

If you are struggling with past-due child support in Texas and considering Chapter 13 bankruptcy, you should consult with a New Braunfels, TX bankruptcy attorney. Take the first step towards financial stability and fulfilling your parental responsibilities. Call Law Offices of Chance M. McGhee at 210-342-3400 to start by scheduling a free consultation.