Bankruptcy won’t erase back child support—it’s one of those debts that stays with you until you pay it off. Even so, if you qualify for Chapter 7, filing for bankruptcy can help.
You’ll be able to discharge (wipe out) other debts that might be making it hard for you to pay your child support, such as credit card balances, medical bills, and personal loans, and the cash infusion might be just what you need to catch up on your arrears.
Here are some benefits of filing for Chapter 7 bankruptcy.
If you file for Chapter 7 bankruptcy, you’ll still have to make current support payments and will continue to owe back support. For instance, Chapter 7 won’t stop child support creditors from:
However, other creditor actions will stop.
When you file for bankruptcy, an injunction, called the automatic stay, goes into effect prohibiting most other creditors from continuing to try to collect debts from you. (Learn more about exceptions to the automatic stay.)
One of the hallmarks of Chapter 7 is that you can keep exempt property—necessary items you’ll need to work and live—but the bankruptcy trustee assigned to your case will sell luxury items and distribute the funds to your creditors.
There is some good news though. If you have nonexempt property that you can’t protect, the sale proceeds will likely go to pay down the amount you owe on your child support arrears. Because child support has a high payment priority in bankruptcy, support arrears must be paid in full before any money gets used to pay toward dischargeable debts like credit card balances.
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.
Here are a few other important points.
While bankruptcy stops most wage garnishments, Chapter 7 won’t stop wage deductions or garnishments for child support. Here’s why.
Because each situation is different, you’ll likely benefit from talking to a bankruptcy lawyer about the effect a Chapter 7 case will have in your situation. An attorney should be able to tell you if any of your assets are at risk.
If you’re hoping to avoid your child support creditors by not listing the debt in your bankruptcy, don’t do it. You’re required to disclose all debts fully when filling out your bankruptcy paperwork.
Also, the trustee will ask you questions under oath at the Chapter 7 meeting of creditors—the one hearing all filers must attend. Specifically, the trustee must notify the state child support agency of your bankruptcy filing. So one of the questions the trustee will ask is whether you owe a support obligation.
If you need time to get caught up on your back child support, filing for Chapter 13 bankruptcy can get you up to five years to repay your arrears. The benefit of this approach is that you can avoid a wage garnishment during that time. However, you might pay more in fees.
You can find out whether this approach would work for you by speaking with a bankruptcy lawyer.