Bankruptcy and Child Support: The Facts

Do you owe child support? Read on to learn more about what happens to child support debt if you declare bankruptcy.

What Happens To Child Support If You Declare Bankruptcy?

It doesn’t matter if you declare Chapter 7 or Chapter 13 bankruptcy, the reality is that child support is not discharged. Child support is considered a priority debt and filing for bankruptcy will not prevent a lawsuit to establish child support payments or to collect payments from property that is not joined in the bankruptcy estate.

For example, any property that you acquire after the date you filed for bankruptcy would be considered fair game.

What Are Priority vs Non-Priority Debts?

Priority debts are named so because they are given priority over all other debts, specifically because Congress has determined that these debts are important for the common good. Examples of priority debts include:

Child Support
Spousal Support
Payroll Taxes
Sales Taxes
Criminal Fines

Since these debts are not dischargeable, any balances will need to be paid.

Non-Priority Debts can be discharged in bankruptcy and typically include:

Medical Bills
Personal Loans
Credit Card Debt

If you have questions about which of your debts are priority vs non-priority, contact our law office today to learn more.

What Happens If I Don’t Pay My Child Support?

Just like any other debt that isn’t paid the consequences can be serious. When it comes to failure to pay child support, those involved can ask the Bureau of Child Support Enforcement to become involved. The Bureau can petition a court to punish those who don’t pay child support. Possible outcomes include:

Time spent in jail.
The seizure of any workers’ comp or personal injury payments.
Seizure of bank accounts.
Leins against real estate.
Seizure of tax refunds.
Passport denial.
Suspension of various licenses.
Publication of names as a delinquent parent on various social outlets.

These are all in addition to the garnishing of wages that will likely occur.

This may seem like an impossible situation but declaring bankruptcy can actually make it easier to pay off your child support debts if you take the right steps.

Building A Life After Bankruptcy

There are many reasons why individuals and families end up declaring bankruptcy and typically, this action makes that involved feel like they will never again be able to build credit. But there are steps that should be taken that will help to build a brighter, financially stable future.

Create a budget: Go through all of your necessary expenses and cut any non-necessary items. Getting advice from a financial specialist is always a good idea.
Start saving: It’s important to always have an emergency fund. Every little bit that is tucked away could help in the future.
Inquire about credit building options: There are creditors who will help you to rebuild your credit through small loans. Be sure to make timely payments.

With a little planning, you can move forward.

Why Should I Contact A Bankruptcy Lawyer?

Although you can file for bankruptcy without an attorney, it’s best to contact because it could potentially save you money in the long run. An attorney can help you determine which type of bankruptcy you should pursue, advise you of options other than bankruptcy, choose and apply any exemptions, and guide you through the process.

Call now to learn more.