Fallout from the rocky American economy of the last decade has done one thing if nothing else: created an unfathomable amount of past due and unpaid child and spousal support. The federal government estimates that American parents owe in excess of $100 billion in delinquent child support alone.
If you are one of those parents, you may have asked yourself if there is any way your support delinquencies could be discharged in bankruptcy, and then answered, no way on God’s green earth….that would have been a mistake. In fact, while bankruptcy will not let you wipe the slate clean, it can enable and thus empower you to manage that debt.
So yes, you were right in your initial thinking to whether past due child and spousal support are dischargeable in a Chapter 7 or so-called “straight" bankruptcy – Child support is not dischargeable. No exceptions.
But you can reach delinquent child and spousal support in a Chapter 13 proceeding. What? Yes, that’s right. A Chapter 13 petition buys you some breathing room and allows you to catch up. The law expressly allows you to include past due child support payments in your repayment plan.
What is the benefit of that, if you have to pay it off anyway? Good question, and glad you asked. The legal meshing of child and spousal support laws and bankruptcy nuances is highly complicated. It involves both state laws and federal bankruptcy rules. Today’s featured article sheds a light on the wider picture, and gives you the tools to get yourself on the road to financial recovery.
Another important feature of the Chapter 13 proceeding is that it stops or stays all legal proceedings and garnishments. That includes child support payments that may currently be coming out of your pay check. Usually the stay will remain in place until such time as a practical repayment plan or reorganization has been put into place, thus providing you with needed peace of mind. Check out our latest article to know more.