Child Support and Alimony Payments During and After Bankruptcy
Finances during and after a divorce can be complicated; this can be especially true if you or your former spouse must apply for bankruptcy. Understanding the laws that govern commitments like child support and alimony can make the transition easier. No matter what financial issues you or your former spouse may run into, you still have a duty to your children and to live up to the terms of your divorce. The courts and your legal counsel can work with you to ensure that you are able to meet your obligations or have an obligation to you met.
What types of bankruptcy can individuals file for?
In general, most individuals will choose either Chapter 7 or Chapter 13 bankruptcy. With Chapter 7 bankruptcy, the individual is insolvent and seeks to eliminate unsecured debts that can include medical bills and credit card bills. Chapter 13 is a reorganization bankruptcy. This type of bankruptcy is chosen by individuals who still have significant assets and income, but who are unable to continue to pay their debts as they are currently structured. While each of these will handle obligations like child support and alimony a bit differently, neither can eliminate the debt owed for either child support or alimony.
Should child support and alimony be paid during bankruptcy?
Yes. If you are someone receiving child support, you should continue to receive payments each month, regardless of the bankruptcy proceedings. You should get in touch with the courts if child support or alimony payments stop during bankruptcy proceedings, as the court orders for these support payments are not invalidated by a bankruptcy filing.
It is imperative that someone with a support order continue to comply with court orders even during bankruptcy proceedings. These sorts of debts are typically not dischargeable. This is because payments like child support payments are considered necessary for adequate financial support of the child. Alimony payments are also part of the legal settlement during divorce and are among the commitments it is necessary to pay during bankruptcy proceedings.
Can back child support or alimony debt be eliminated in bankruptcy?
If child support or alimony payments have not been paid in some time, there could be a balance for back child support. These are debts that cannot be discharged in bankruptcy, whether the individual seeking bankruptcy relief is filing Chapter 7 or Chapter 13.
Both of these types of bankruptcy include a number of types of debts that can be discharged and a number that cannot. An obligation to pay child support is considered a nondischargeable debt because it is necessary for the good of the child.
Alimony is considered a domestic support obligation. As a general rule, these cannot be eliminated. However, there are instances where the obligation can be removed. If a divorce decree considers a marital debt alimony, but it is not technically alimony, it may be dischargeable. Additionally, if an alimony obligation has been assigned to a third party, it may be dischargeable. An example of this would be an individual assigning rights to the payment in exchange for temporarily taking over alimony payments.
Can failure to pay have a negative effect during bankruptcy?
If the individual with the support order is considering Chapter 13 bankruptcy, all priority obligations must be met through a repayment plan. That means that there must be a plan that includes these regular payments. All existing arrears must be paid before debts can be discharged in Chapter 13 bankruptcy.
What if the individual cannot pay the ordered support amounts?
If someone’s financial situation changes and they are unable to make the payments ordered, it’s important to seek a modification to the child support or alimony order. This will require another visit to court to get the order legally changed. In the meantime, the individual must continue making the payments agreed to. Otherwise, they can find themselves in violation of the child support order, which can result in garnished wages, suspended licenses or even imprisonment. In general, child support orders are based on each parent’s income and how much of the time they are primarily responsible for the child. Your lawyer can help you go over your finances to determine how much child support you are able to afford to keep you in compliance with court orders and see that your child is supported at the appropriate level.
It is important for all parties to keep on top of their obligations throughout the time that support is ordered. By working out the best way to meet child support or alimony payments, even during a bankruptcy proceeding, you can avoid further negative effects and begin working back to financial stability.