The Impact of Bankruptcy on Child Support and Alimony
In the midst of financial turmoil, filing for bankruptcy can seem like a beacon of hope for many struggling with overwhelming debt. However, for individuals with obligations such as child support and alimony, the intersection of bankruptcy law and family law presents a complex landscape. At Wadhwani & Shanfeld, we understand the nuances involved and are committed to providing clarity on this critical issue. This blog explores how bankruptcy affects child support and alimony, shedding light on what debts can and cannot be discharged.
Bankruptcy law categorizes debts into various classes, with certain obligations receiving priority over others. Notably, child support and alimony are considered priority debts. This designation reflects the legal system’s recognition of the importance of these obligations, ensuring they are not easily discharged or diminished through bankruptcy proceedings.
Child Support and Alimony in Chapter 7 Bankruptcy
Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, allows individuals to discharge many types of unsecured debts. However, child support and alimony are not among them. These obligations remain fully intact, unaffected by the discharge that applies to other forms of debt. Furthermore, assets liquidated in Chapter 7 proceedings may be used to satisfy outstanding child support and alimony debts before addressing other non-priority claims.
Child Support and Alimony in Chapter 13 Bankruptcy
Chapter 13 bankruptcy, known as a wage earner’s plan, involves restructuring debts into a manageable repayment plan over three to five years. While Chapter 13 does not discharge child support and alimony obligations, it can provide a framework for catching up on arrears. Importantly, maintaining current child support and alimony payments is a prerequisite for the successful completion of a Chapter 13 plan. Failure to keep up with these obligations can jeopardize the bankruptcy process and lead to the dismissal of the case.
The Automatic Stay and Family Obligations
Filing for bankruptcy triggers an automatic stay, temporarily halting most collection actions against the debtor. However, the automatic stay does not extend to child support and alimony collection efforts. Legal actions to establish or modify child support or alimony, as well as any income withholding for debt repayment, are not stopped by the bankruptcy filing. This exception underscores the priority given to family support obligations, ensuring that bankruptcy does not interfere with a debtor’s responsibility to provide for their dependents.
Dischargeable vs. Non-Dischargeable Debts
While child support and alimony themselves are non-dischargeable, other divorce-related debts may be treated differently. For example, debts assigned to a spouse in a divorce decree, other than direct support payments, may be dischargeable under Chapter 13 bankruptcy. This distinction is crucial for individuals navigating the financial aftermath of a divorce, highlighting the importance of understanding which obligations can be restructured or eliminated through bankruptcy.
Filing for bankruptcy does not absolve individuals of their ongoing responsibility to pay child support and alimony. These obligations continue to accrue post-bankruptcy, and failure to comply can result in legal consequences, including contempt of court. Bankruptcy may provide relief from other financial burdens, allowing individuals to manage their support obligations better moving forward.
Bankruptcy Considerations with hild Support and Alimony Obligations
For those considering bankruptcy while facing child support and alimony obligations, careful planning and legal guidance are essential. Here are steps to consider:
- Consult with a Bankruptcy Attorney: An experienced attorney can help you understand how bankruptcy will affect your specific situation, including your support obligations.
- Communicate with Your Family Law Attorney: Ensure that your family law attorney is aware of your bankruptcy plans, as this may impact ongoing divorce or support proceedings.
- Prioritize Support Payments: To the extent possible, continue making child support and alimony payments throughout the bankruptcy process to avoid legal complications.
Contact Wadhwani & Shanfeld
Bankruptcy offers a path to financial relief for many, but it does not alter the fundamental responsibility to provide child support and alimony. These obligations remain a priority, reflecting the legal system’s commitment to protecting the well-being of dependents.
At Wadhwani & Shanfeld, we’re dedicated to guiding our clients through the complexities of bankruptcy while ensuring they understand their responsibilities toward child support and alimony. If you’re grappling with debt and concerned about how bankruptcy may impact your support obligations, we’re here to help you navigate these challenges with confidence and clarity.
Sources:
abi.org/feed-item/does-chapter-7-bankruptcy-help-child-support-arrears
thebankruptcysite.org/resources/bankruptcy/bankruptcy-planning/does-child-support-income-affect-my-bankruptcy-case
