For many people who have missed child support or alimony payments or those who have not received the payments due to financial strain a bankruptcy may be necessary to resolve other financial issues to increase their ability to provide for such obligations. For those on the receiving end of the financial payments it may be concerning when the other parent or ex-spouse fails to maintain payments and in turn files for bankruptcy. However, it is important to remember that any missed payments for child support will still be necessary and that only a modification of child support or alimony can alter the payment methods of either obligation. While a modification of child support or alimony may be necessary, a modification will not extinguish past due child support and alimony payments. Likewise, the sooner you receive a modification, the better as it will reduce the amount of ongoing current required support payments. This in turn, can make the feasibility of a bankruptcy case resolving past due child support and alimony issues easier.
Bankruptcy does not discharge Child Support or Alimony
Specifically, an obligation to pay past due, present and future child support is not discharged in a personal bankruptcy case. And although a modification will alter the payment methods of future payment obligations it will not retroactively alter past owed payments. In a bankruptcy case, child support and alimony payments will receive specialized treatment that will ensure that each is accounted for, and that the debt is repaid if their are significant assets or a Chapter 13 repayment plan.
In other words it is not possible to discharge these debts by filing for bankruptcy. However, the bankruptcy type (Chapter 7 vs. Chapter 13) in question may impact how repayment of these debts occurs.
There are three types of bankruptcy cases an individual can file to help resolve a child support or alimony issue, which are outlined as follows.
Chapter 7 Bankruptcy: A Chapter 7 bankruptcy case does not involve any type of payment plan. However, it can eliminate many other debts that may be hindering or preventing someone from being able to pay their child support or alimony. In addition, any unprotected assets can be liquidated to pay past due child support obligations. While the liquidation of assets is not a common occurrence in most Chapter 7 cases, it is contemplated and could be an issue in any case where the debtor does have significant assets.
Chapter 13 Bankruptcy: A Chapter 13 bankruptcy case will require a payment plan, prioritizing payments toward past due child support and alimony payments. In addition, current child support and alimony payments will need to be kept current. This kind of bankruptcy case is usually best for someone that owes back child support or alimony due to a disruption in their income, and is now fully employed. Because unsecured debts such as credit cards, personal loans, etc. do not receive any payments till the child support and alimony arrearages are funded, a Chapter 13 case can be very helpful when there are also other debts.
Chapter 11 Bankruptcy: A Chapter 11 bankruptcy case is not common to be filed by individuals. However, when filed, they do offer many of the same benefits of a Chapter 13 case. Chapter 11 bankruptcy cases are best suited for individuals that owe too much money to file a Chapter 13 case, and may have very significant assets and/or very significant income. Chapter 11 cases are sometimes filed by highly compensated individuals, making a Chapter 7 and a Chapter 13 not the best option.
In Chapter 7 bankruptcy it is not possible to discharge child support or alimony payments and likewise it is not possible in Chapter 13 bankruptcy to discharge the same payments / debt.
However, depending in the type of bankruptcy the repayment of such debts may be impacted on the type of bankruptcy pursued. In a Chapter 13 bankruptcy the person filing for bankruptcy must certify to the court that all payments and obligations in relation to support are current prior to the ability to obtain a discharge of all other debt. A Chapter 13 bankruptcy case also allows for a repayment plan to be established prior to the repayment of all other debts. A Chapter 13 can also be used to help a person be released from jail to resume making child support or alimony payments if they have been jailed for contempt for not making the payments in the past. However, the person filing the Chapter 13 bankruptcy case must strictly adhere to a Chapter 13 plan that includes making the current payments and catching up the arranges, or they may face going back to jail for contempt. It is always best to not wait till a person is already incarcerated to file a Chapter 13 for child support or alimony obligations. It is always best to file a case when a person is free to make phone calls to attorneys,
Child support and alimony receive priority in bankruptcy situations and are considered to be of utmost importance as the highest priority of any other type of debt.
If you find yourself in this type of situation you must seek advice from a bankruptcy attorney or other appropriate state support agency to file for a claim with the court documenting the exact amount of back support debt owed. Once you properly document the amount of debt owed then due to the high priority of the debt you should be the first creditor to obtain repayment of the debt owed. If the debt fails to be repaid prior to the bankruptcy process it will be mandatory that this debt is repaid prior to the discharge allowance of all other debts. Also, something that is not always apparent to the party receiving child support and/or alimony is that the filing party frequently files bankruptcy to make it easier to pay the support. It stands to reason if a person files bankruptcy and is relieved of burdensome credit cards bills, wage garnishments, lawsuits and other financial burdens – he or she will likely have more resources to pay their non-dischargable support obligations.
Obtaining assistance with your bankruptcy case.
If you have any questions about bankruptcy, divorce, family law and/or related family law issues call us at 770-609-1247 to discuss your questions with an experienced Georgia divorce, family law or bankruptcy attorney. Contact >