It is not uncommon for people to file for bankruptcy at some point after they have gone through a divorce. Divorce can be expensive and leave many people with more debt than income. Bankruptcy is often the best choice to start with a clean slate.
However, if you are someone who has been ordered to pay child support, it is important to know that your bankruptcy filing will not affect your legal obligation. You are required to continue to make your child support payments just as you have been ordered to, regardless of the status of your bankruptcy filing.
A bankruptcy lawyer can explain to you the two different types of personal bankruptcy a person can file and which choice would be the best for your situation.
Chapter 7 bankruptcy entirely erases a person’s debt. This is done by selling whatever assets the person may have to pay their creditors. Whatever debt is left over is canceled by the court.
Chapter 13 bankruptcy is more of a reorganization of debt. The trustee of the bankruptcy case will reorganize the person’s debt and set up a new payment schedule. This schedule is based on the individual’s income. After three years, whatever debt is still remaining is canceled by the court.
There are certain debts that cannot be canceled by bankruptcy. These are referred to as priority debts and include tax obligations, student loans, and child support obligations. Parents are required to continue to make child support payments as the bankruptcy process is going on.
In fact, in order to receive a discharge from the bankruptcy court, a parent must be current in their child support obligation. Since filing bankruptcy immediately brings to a halt the requirement of paying all of the other debts a person may have, the courts feel they should use these extra funds to pay off any back child support obligation owed.
Once the bankruptcy process has been completed and all of the debts discharged, a parent may consider filing a petition to modify their child support obligation. If the reason for the paying parent’s bankruptcy was due to circumstances such as job loss or medical issues, and they can show the court that they now have a substantial change in income, the family court judge may lower their child support obligation if it falls under different guideline amounts.
Whether you are the receiving parent or the paying parent, child support can often cause financial issues. If you are the receiving parent and you are not receiving your support and this has caused financial hardship, bankruptcy may be an option that can help alleviate your financial stress until you are finally paid the back support you are owed.