No matter how tight money gets, taking care of your children is always a top priority. If you’ve found yourself in more debt than you can handle and are responsible for child support as well, you may wonder what filing bankruptcy will mean for your situation. Will the support payments be included in the bankruptcy? Or will they be reduced? I can help you walk through all of these important questions. One thing to be aware of is that child support cannot be discharged through any type of bankruptcy.
While filing any chapter of bankruptcy will begin the automatic stay and you can then stop making payments on unsecured debts, you will still need to stay up to date on your payments (as well as secured debt payments, if you want to keep your property.) Bankruptcy of any type will not stop your child support, and it will also not affect any court proceedings to establish or modify your support. All priority debts, such as child support, must be paid in full, on time each month, and if you fail to make your payments, you could be sued. Filing a Chapter 7 could result in some of your non-exempt property being taken and sold to repay creditors, but we’ll use the many available exemptions to protect as many of your assets as possible. If the court does take some of your property, the trustee will decide which creditors receive payment and how much. Child support is usually the top priority.
One of the benefits of choosing a Chapter 13 bankruptcy is that you can include any child support arrearages into your repayment plan as a priority debt. We’ll design your plan to include your full child support payments with the missed payments spread out over the course of your 3-5 year plan. Making your child support payments may reduce the overall debt you’ll pay off in a Chapter 13. Priority debts are paid first, with any remaining disposable income going toward other lower priority or unsecured debts. In some cases, where there is little disposable income remaining, unsecured debts aren’t paid at all before they are discharged.
It’s imperative that you stay current on your Chapter 13 repayment plan; otherwise, your creditors could file for a “relief from the automatic stay.” If this is approved by the court, you would need to begin making full debt payments immediately. You’ll need to stay current on child support payments until the end of the debt period, or your bankruptcy discharge could be delayed.
Making a Plan
Of course you want to make sure your children are provided for and are willing to make whatever sacrifices necessary to make that happen. If you need to file bankruptcy, the court will look at your overall financial situation, which could result in a modification of your child support payments. You may also be able to free up enough room in your budget through the discharge of bankruptcy to make your payments easier to handle. No matter your situation, we can work together to make a plan that works for you.