In the United States, when debtors get too far behind on their debts, they
have the option of filing Chapter 7 or Chapter 13 bankruptcy. Chapter
7 is known as the “debt liquidation bankruptcy,” and it’s
basically reserved for low-income bankruptcy filers. Often, the unemployed
or underemployed will file for bankruptcy under this Chapter. With a Chapter
7 bankruptcy, many types of debts are erased or wiped out. Meaning, once
they’re discharged, the debtor is not liable to pay them.
Not all debtors qualify under Chapter 7. Those debtors who have a decent
income may not qualify for Chapter 7. Instead, they may have to file a
Chapter 13 bankruptcy where they pay off all or just a portion of their
debts over 3 to 5 years through a repayment plan.
Since it’s not uncommon for non-custodial parents to owe thousands
in back child support, it’s understandable why they often ask, “Can my
child support arrears be included in my bankruptcy filing?” Read on as we explain
whether child support can be reduced or eliminated through Chapter 7 and
Chapter 13 bankruptcy.
Child Support Can Not Be Reduced or Eliminated
It doesn’t matter if you file a Chapter 7 or a Chapter 13 bankruptcy;
child support debt cannot be reduced or eliminated through bankruptcy
because Congress decided it is too important to let it be included in
bankruptcy. Even though child support is technically an “unsecured
debt” like credit cards, it cannot be erased through Chapter 7.
The same goes for spousal support and recent taxes.
If you file a Chapter 13 bankruptcy, you still have to pay what you owe
in child support, however, since child support is a “priority debt,”
it can actually reduce how much a debtor pays toward other non-priority
debts, such as credit card debts or medical debt.
For instance, if you owe $10,000 in child support and $10,000 in credit
cards, the child support debt may actually reduce what you have to pay
to your credit card companies. So, filing a Chapter 13 may still be beneficial
to you in the long-run.
Can I Avoid Child Support if I’m Disabled?
Do you need help with a child support case? If so,
contact Claery & Hammond, LLP to schedule a
free case evaluation with a member of our legal team.