Hi all! Can you believe December is already halfway done? I am trying to soak up as much of this holiday season as possible before it’s gone in the blink of an eye. Today I wanted to talk about specific debts and discharges when it comes to Chapter 7 Bankruptcy.
Many believe Chapter 7 Bankruptcy wipes away all debts, including any outstanding child support payments. Today’s blog will show you why this is not the case.
- Child support is considered a priority debt that is NOT dischargeable when you declare Chapter 7 Bankruptcy.
- This is the case with ALL forms of Bankruptcy. Declaring bankruptcy under a different chapter/provision will not stop you from having to pay child support.
- Even though filing for Chapter 7 Bankruptcy places a stay to prevent creditors from pursuing claims against you, this does NOT prevent actions to establish or pay child support.
- This also means that if you are receiving child support payments and file for Chapter 7 Bankruptcy, you WILL NOT stop receiving those payments. Additionally, most child support money received before filing for bankruptcy is “exempt” so the trustee assigned to your case cannot take that money and use it to pay off creditors.
- The exemption, however, is not automatic. You will need to list any accumulated or present child support payments as an asset, and then record it as exempt property in order to protect it.
- Not only are you required to continue paying child support, but if you are trying to use Chapter 7 Bankruptcy to wipe out any past unpaid child support obligations, this simply will not work. Since it is a priority debt, you will be required to pay it and cannot use a bankruptcy filing as a “get out of jail free” card.
- Because you are required to continue paying child support, stopping or refusing to do so may affect your bankruptcy filing which will stop you from having a successful claim and getting the relief that you need.
- A payment modification may be requested depending on the income of the parent and their abilities, and this is a case-by-case determination, but, no matter what, you will continue to receive, or continue to be obligated to pay, child support.
I hope this blog sheds some light on what is and isn’t discharged when filing for Chapter 7 Bankruptcy and what this can mean for your claim. As always, if you have any questions or confusion, please do not hesitate to contact our office!
Sources:
https://www.justia.com/family/child-custody-and-support/child-support/child-support-and-bankruptcy/
https://www.thebankruptcysite.org/resources/bankruptcy/bankruptcy-planning/does-child-support-income-affect-my-bankruptcy-case
https://www.texasattorneygeneral.gov/child-support/paying-and-receiving-child-support/get-back-track/child-support-and-bankruptcy
***The information contained in this blog is not a form of legal advice. Please contact your attorney or our office with any legal questions related to Chapter 7 Bankruptcy or child support.
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