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 discharge child support debt. Chapter 13 can offer steps towards repaying the debt over a period of time.
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 establish 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.
Ongoing child support payments are required through the proceeding and the goal of Chapter 7 can be to free up other debts to focus on paying the child support you owe.
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. 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. You must be current on child support since the filing of the case in order for your plan to be confirmed. At the end of your case, you must be current on your child support that was due during the case and any past due amounts from before the filing of the case in order to receive a discharge.
If you stop paying child support during your Chapter 13 repayment, the court will typically lift the granted automatic stay and allow the child support creditor to go after your earnings and other property that are part of the bankruptcy estate in order to clear the outstanding balance.
If you have outstanding child support debt and are considering a personal bankruptcy filing, it’s vital that you 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.