A less common but still important facet of bankruptcy is what happens to unpaid child support debt. In short, both Chapter 7 and 13 filings do not clear or wipe out child support debt but can offer steps towards repayment.
Child Support Debt in Chapter 7 Bankruptcy
The automatic stay against creditors in Chapter 7 does not apply to child support or the agencies tasked with collecting it. The stay does not prevent or delay attempts to collect support from property that is not part of your bankruptcy estate. Child support agencies and creditors can come after post-bankruptcy earnings, including any wages earned after filing. The appointed bankruptcy trustee also has obligations to report back child support to the court.
A debtor must pay ongoing child support payments through the proceeding, and the goal of Chapter 7 can be to free up other debts to focus on any child support due.
Child Support Debt in Chapter 13 Bankruptcy
In Chapter 13, child support is treated as a priority debt and can’t be eliminated by a discharge. Any missing payments you’ve accrued from child support must be paid back as part of the overall repayment plan. (Since a Chapter 13 repayment plan cannot exceed five years, owed child support may make the monthly payment high.) In many cases, paying child support can reduce the amount you owe to other creditors (such as credit card companies) as that debt is considered general unsecured debt.
Suppose you stop paying child support during your Chapter 13 repayment. In that case, the court will typically lift the granted automatic stay and allow the child support creditor to go after your earnings and other property within the bankruptcy estate to clear the outstanding balance.
If you have outstanding child support debt and are considering a personal bankruptcy filing, it’s crucial to consult a qualified and knowledgeable Arkansas bankruptcy attorney. Call Natural State Law today at (501) 916-2878 to learn more and schedule a free consultation with one of our professional bankruptcy attorneys.