Child support is one of those debts that sticks with you, even in bankruptcy. You can’t discharge child support arrearages (overdue amounts) in Chapter 7 or any other type of bankruptcy. But filing a Chapter 7 bankruptcy can still be helpful if you owe back child support; you might be in a better position to pay it if you can eliminate other debts in bankruptcy.
Discharge Does Not Apply to Child Support Debt
When your Chapter 7 bankruptcy is completed, you'll get a "discharge." The discharge will get rid of your obligation to pay many of your debts. But not child support. Child support creditors do not need to sue you or get any special court order to stop the debt from being discharged. Child support is simply not covered by a bankruptcy discharge. (Learn more about the Chapter 7 bankruptcy discharge.)
Exceptions to the Automatic Stay for Child Support Creditors
When you file for bankruptcy, an injunction, called the automatic stay, goes into effect which prohibits creditors from continuing to try to collect debts from you. While the automatic stay may provide relief from most bill collectors, there are limits when it comes to child support. In a Chatper 7, the automatic stay does not stop child support creditors from
- taking action to determine the amount of child support due
- continuing collection of back support from any property you have claimed as exempt (or is not part of the bankruptcy)
- continuing collection of back support from assets you acquire after you file, and
- pursuing contempt actions in the divorce court for your failure to pay child support. (Learn more about exceptions to the automatic stay.)
Wage Deductions and Garnishments for Child Support Continue
While bankruptcy stops most wage garnishments, Chapter 7 does not stop wage deductions or garnishments for child support. This is because
- wages you earn after you file for Chapter 7 are not part of the bankruptcy
- child support debt will not be discharged, and
- the automatic stay does not stop collection for child support from assets or property that are not part of the bankruptcy.
Good News for Bankruptcy Filers Who Owe Child Support
But all is not lost. There are some benefits to filing for Chapter 7 bankruptcy if you owe child support.
Priority Status for Payment of Child Support from the Bankruptcy
There is some good news though. If you have to file for bankruptcy and have non-exempt property, the trustee can take the nonexempt property and sell it to repay your unsecured creditors. If this happens, the sale proceeds will likely go to your child support creditors before any money will be paid on your credit card debt. This is because child support is given a high priority for payment under the bankruptcy laws. (Learn more about priority debts in Chapter 7 bankruptcy.)
This is a benefit to you because any property the trustee sells will help repay your child support debt (which you'll owe after bankruptcy) and not debts that will be discharged.
How Chapter 7 Can Help You Pay Child Support
However, if you owe child support, you can still file for bankruptcy and discharge your other debt -- as credit card and medical bills. Despite the bankruptcy, you will continue to owe back support and still have to make current payments. But if you have other debt which is making it difficult for you to make your child support payments, getting rid of your other debt by filing for bankruptcy may make it easier to make your child support payments and catch up on back child support.
You Must List Your Child Support Debt on Your Bankruptcy Schedules
If you have been able to evade your child support creditors and you are thinking about not listing the debt in your bankruptcy, you might want to think again. The trustee is required to ask you questions about support obligations and must notify the state child support agencies of your bankruptcy filing.