How Will Bankruptcy Affect Past-Due Child Support or Alimony?

 Posted on March 31, 2022 in Bankruptcy

If you are experiencing financial difficulties, you may be struggling to make payments toward multiple different types of debts and expenses. In these situations, it can be understandable to prioritize expenses that are absolutely necessary, such as rent, utilities, gasoline, and groceries, and you may have been unable to make other types of payments. In addition to getting behind on credit cards or other debts, you may have been unable to make payments toward domestic support obligations, such as child support or spousal support that you are required to pay following a divorce. While bankruptcy may provide you with some financial relief and allow you to regain financial stability, you will need to be sure to understand how it will affect the support payments that you owe.

Bankruptcy and Domestic Support Obligations

When you owe child support or spousal support, the recipient of these payments is considered to be one of your creditors. You are legally obligated to make all required payments, and if you get behind on payments, you must pay the full amount owed, and you may also be charged interest. 

While bankruptcy will allow you to eliminate some debts, different creditors are treated differently during the bankruptcy process. Domestic support obligations are considered priority debts, and unlike some other debts, they cannot be discharged through bankruptcy. However, you may be able to discharge some other debts and create a plan that will allow you to repay the amount you owe to your ex-spouse or your child’s other parent. 

If you pursue a Chapter 7 bankruptcy, you will be able to eliminate unsecured debts such as balances on credit cards. You may also discharge secured debts, such as a home mortgage or auto loan, although this will likely result in a foreclosure or repossession, and you will not be able to maintain ownership of the property used to secure these debts. Depending on the extent of other property you own, some of your assets may be seized and liquidated to repay debts that are discharged through bankruptcy. While you will be required to pay domestic support obligations in full, discharging other types of debts can provide you with the financial resources to do so.

If you pursue a Chapter 13 bankruptcy, you will be able to discharge your unsecured debts and pay past-due amounts on other debts you owe. A repayment plan will be created in which you will make monthly payments toward the debts you owe for either three or five years, and you will also be required to make ongoing payments toward secured debts and domestic support obligations. Your repayment plan will allow you to pay off the past-due child support or alimony you owe, and since these are considered priority debts, they may be paid off first, allowing you to avoid penalties for non-payment. Once you finish your repayment plan, unsecured debts included in the plan will be discharged, and you will likely have the resources to continue making child support or spousal support payments while maintaining financial stability.

Contact Our New Braunfels Bankruptcy and Divorce Lawyer

If you have encountered problems that have affected your ability to make support payments or pay other debts, you will need to understand the steps you can take to address these issues. In some cases, you may be able to request modifications to your obligations based on changes in your circumstances, but you will still be required to pay any past-due amounts. At the Law Offices of Chance M. McGhee, we can help you understand how you can use bankruptcy to address these issues, eliminate some of your debts, and receive the relief you need. Contact our Schertz bankruptcy and debt discharge attorney at 210-342-3400 to set up a complimentary consultation today.

Sources:

https://www.law.cornell.edu/uscode/text/11/523#a_5

https://www.law.cornell.edu/uscode/text/11/101#14A