If you have any outstanding child support debt, filing for Chapter 7 bankruptcy will not wipe out your obligation to pay it. In addition, Chapter 7 will not stop a legal proceeding to establish or collect child support. Read on to learn more about what happens to child support debt in Chapter 7 bankruptcy.
Chapter 7 Bankruptcy Does Not Stay Actions to Collect Child Support
When you file for Chapter 7 bankruptcy, the automatic stay stops most creditors from coming after you to collect their debts. However, child support debt is an exception to this rule. The automatic stay does not prevent or delay a lawsuit to establish child support or collect it from property that is not part of your bankruptcy estate. (Learn more about the automatic stay in bankruptcy.)
In Chapter 7 bankruptcy, property acquired after your filing date is not considered property of the bankruptcy estate. This includes any wages earned after filing your case. Since your post-bankruptcy earnings are not property of the estate, child support creditors are free to go after them during your bankruptcy. (Learn more about property that is not part of your bankruptcy estate.)
Child Support Debt Can’t Be Discharged in Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, child support debt receives special treatment because it is considered a priority debt. Priority debts are nondischargeable in bankruptcy. This means that if you owe any outstanding child support debt, it will not get wiped out by your bankruptcy discharge. As a result, filing for Chapter 7 bankruptcy will not eliminate your obligation to pay child support and make up any missed payments. (To learn more, see Priority Debt in Chapter 7 Bankruptcy.)
You Must Continue Making Ongoing Child Support Payments During Bankruptcy
Since child support is a priority debt, filing for Chapter 7 bankruptcy does not affect your obligation to make your ongoing payments as they come due. As discussed above, if you fall behind on your child support payments, the automatic stay will usually not prevent a lawsuit to collect past due amounts. If you can’t afford to keep up with your child support payments, Chapter 7 bankruptcy can help you by wiping out your other debts and freeing up more income to put towards child support.
Child Support Debt Gets Paid Before Most Other Debts
If you have nonexempt assets, a Chapter 7 trustee can sell them and distribute the proceeds among your creditors. However, not all creditors are treated the same in bankruptcy. Whether a creditor will get paid depends on the type of its debt and the amount of available proceeds.
Priority debts, such as child support, get paid before general unsecured debts like medical bills and credit card debt. In fact, child support debt gets paid even before most other priority debts such as recent tax obligations. As a result, if you own nonexempt assets, filing for Chapter 7 bankruptcy can actually help a child support creditor collect past due payments without having to initiate a separate legal action.
To learn what happens to your other debts, see the articles and Q&As in Your Debt in Chapter 7 Bankruptcy.