Filing bankruptcy is one option to help debtors who are facing a financial crisis. Recently on our divorce forum a user asked, “If I owe $15,000 in back child support debt can I file Chapter 7 bankruptcy and have this debt obligation eliminated?”
Filing bankruptcy and child support debt
Chapter 7 bankruptcy is a legal means to have certain types of unsecured debt obligations discharged. Chapter 7 bankruptcy allows the court to appoint a trustee to your case. This trustee has the legal right to take certain non-exempt assets and sell them to generate money to repay your creditors. After your debts have been paid, if there are remaining dischargeable unsecured debts, these will be discharged and you will not have to repay them. Common debts that can be discharged include unsecured personal loans, hospital bills, and credit card debts.
What will Chapter 7 bankruptcy not do for you?
Chapter 7 bankruptcy is not available to all debtors. In fact, stricter bankruptcy laws have made it more difficult for many filers to have their unsecured debts discharged. If you do not meet the debt and income requirements for Chapter 7 bankruptcy you will not be allowed to file Chapter 7 and will, instead, have to file Chapter 13 bankruptcy and create a debt repayment plan to repay your debts over a 3 or 5 year repayment period.
Chapter 7 bankruptcy is not only limited to certain filers, it also has some other limitations. For example, not all unsecured debts are discharged. Debts which are generally not discharged include federal student loans and recent tax debts. Debts which are never discharged include past due child support payments and spousal support.
Why isn’t back pay for child support discharged? The state has a vested interest in every parent supporting their own child. Child support is considered a priority debt payment and cannot be discharged, even by filing Chapter 7 bankruptcy.
What are my options if I owe child support?
If child support is your only debt obligation bankruptcy will not be the best option for you, but there may be some options to help. For instance, if your income has been lowered, you have lost your job, or you have become disabled, you may be able to petition the court to lower your monthly child support payments. Although this will not help with past due payments, it can help going forward.
Next, if you have substantial debts beside child support such as medical debts, payday loans, or other unsecured personal loans it may be possible to have these debts discharged in bankruptcy, freeing up more funds to repay your child support debt.
Talk to a Chapter 7 bankruptcy lawyer
If you are facing a financial crisis, talk to a bankruptcy lawyer. A good lawyer will not recommend a course of action which is not right for you but will help you determine if bankruptcy can help. Filing Chapter 7 bankruptcy is not the best decision for most people. It is a very drastic step and should be used only as your last option.
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