When an individual faces overwhelming debt, they may consider filing for bankruptcy as a way to restructure and possibly discharge some of the funds owed to creditors.
The U.S. Bankruptcy Code offers both businesses and individuals federal legal protections and the chance to pay off a portion of their debts.
However, not all financial obligations can be discharged through bankruptcy; child support obligations are one such exception.
For most people, filing for bankruptcy protection is done under either Chapter 7 or Chapter 13 of the Bankruptcy Code.
Chapter 7 bankruptcy is generally used by people with limited incomes who lack the capacity to repay all or part of their debts. In this case, the court appoints a trustee to manage and prioritize the debts, inventory the debtor’s property, and sell eligible assets to repay some of the debt.
Chapter 13 bankruptcy, also known as reorganization bankruptcy, allows individuals to retain their property by adhering to a court-approved repayment plan. If the debtor successfully completes the plan, they may keep some or all of their property.
With both types of bankruptcy, if the debtor follows court orders and makes payments as directed, unsecured debts are eventually discharged or forgiven.
However, not all debts are dischargeable.
Although most unsecured debts, like credit card and medical bills, can be discharged, some debts are non-dischargeable regardless of the bankruptcy chapter filed.
Non-dischargeable debts include:
Public policy dictates that individuals cannot avoid their obligations to minor children, even during bankruptcy proceedings. To ensure these obligations are met, even property exempt from sale under federal law may be seized and sold.
The court considers the best interests of the child to be of utmost importance and may use any means necessary to ensure that child support payments are made.
The court may also order wage garnishment, which means that a portion of the debtor’s income is automatically withheld by their employer and paid directly to the child support recipient. This can continue even after the bankruptcy proceedings have ended.
Let’s say John owes $500 a month in child support to his ex-spouse, and he has a job with a monthly income of $3,000. If John falls behind on his child support payments and his ex-spouse takes legal action, the court may order his employer to garnish his wages.
The court determines the amount of the wage garnishment, which is typically a percentage of the debtor’s income. In some states, the maximum percentage that can be garnished for child support is 50% of disposable income, which is the income left after taxes and other deductions.
In this example, the court may order John’s employer to withhold 25% of his disposable income or $750 per month, and pay it directly to his ex-spouse as child support. This means that John would receive a paycheck of $2,250 each month instead of his full $3,000 income.
Even if John files for bankruptcy, his child support obligations will remain non-dischargeable, and wage garnishment will continue until the child support debt is paid in full. The only exception would be if John can demonstrate a significant change in circumstances, such as a job loss or serious medical issue, that would justify a modification of the child support order.
Unpaid spousal support and child support debts receive high priority during bankruptcy proceedings, ranking even higher than unpaid taxes.
Attorney’s fees related to these obligations are also non-dischargeable, although unpaid support must be addressed first.
If the debtor cannot immediately pay the amount, the debt does not disappear, but the income considered for bankruptcy purposes varies depending on the chapter.
For Chapter 7 bankruptcy, income earned after filing is not part of the bankruptcy estate and can be used to determine and pay child support obligations and arrears.
In a Chapter 13 bankruptcy, income earned before or after filing is considered part of the bankruptcy estate.
To impose a support obligation, the interested party must request relief from the court-ordered stay on the debtor’s property.
If an individual who filed for Chapter 13 bankruptcy fails to make child support payments, the court typically lifts the stay temporarily, allowing for child support recovery.
Modifying a child support order during bankruptcy proceedings is highly unlikely, as public policy prioritizes support for minor children regardless of circumstances.
However, a non-custodial debtor may seek child support modification through standard family court procedures. To do so, they must demonstrate a significant change in circumstances that renders regular child support payments extremely difficult. A bankruptcy filing alone does not qualify if the debtor remains employed.
If bankruptcy is looming over you or you are the primary caregiver of a child whose other parent is going through bankruptcy, the situation is high-stakes. It’s crucial to consult with an attorney who has expertise in handling complex child support cases to protect your rights. They can guide you through the legal procedures, inform you of your rights, and provide advocacy at each stage.
LegalMatch is an online legal matching service that can help you connect with a qualified bankruptcy lawyer in your area who has experience dealing with complex child support cases related to bankruptcy. By answering a few questions about your legal needs and location, LegalMatch can match you with a lawyer who has the skills and knowledge to help you protect your rights and navigate the legal process.
Through LegalMatch, you can review the profiles of multiple lawyers and compare their qualifications, experience, and fees before deciding which one to hire. This can save you time and money in finding a lawyer who is the right fit for your situation. LegalMatch even comes with a satisfaction guarantee, meaning you can find a new lawyer for free if you aren’t satisfied with the one you choose off the bat.
Use LegalMatch to help you find a lawyer who can provide the guidance, support, and advocacy you need during this high-stakes situation.
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