Many people mistakenly believe filing for bankruptcy will permanently release them from debt. This is simply not true. While many types of debt will be cleared, there are certain kinds you must pay regardless of your bankruptcy status. In most cases, filing for bankruptcy will have little affect on your child support payments.
Different Types of Bankruptcy
There are two ways to file for bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is the most common form and essentially wipes out your debt. This process takes your nonexempt assets and sells them. In the meantime, creditors aren’t allowed to contact you regarding debt. Once assets are sold and creditors are paid, the remaining balance of your debts is cancelled.
Chapter 13 bankruptcy isn’t technically a cancellation of debt. It reorganizes your debts into a manageable payment schedule. Depending on your income, you’ll repay anywhere from 10% to 100% of your total debt. While both forms of bankruptcy greatly help if you’re in substantial debt, neither will relieve you of your obligations to pay child support.
How Does Bankruptcy Affect Child Support?
Certain forms of debt, called “priority debts,” are considered too important to be wiped out by bankruptcy. Child support is one of them. It’s important to keep in mind, however, that while bankruptcy will not eliminate your payments, it can help you catch up on them. When filing Chapter 7, your assets will be sold and your priority debts will be paid first. A Chapter 13 filing will rearrange your debt so child support is the first priority. An experienced Orange County asset protection attorney can help make sure you have a asset protection strategy in place. Your payment terms (which can’t exceed five years) will pay off child support first. Money will then go toward other debts.
What’s an Automatic Stay?
When you file for bankruptcy, an automatic stay is granted. This prevents certain creditor behavior. They aren’t allowed to give you collection calls, and they can’t repossess or foreclose upon your property. In some cases, they may not be able to garnish your wages, either. An automatic stay also prevents certain behavior as it pertains to collecting child support. Generally, the automatic stay means a collector must first get permission from the court to collect from you. It does allow:
- An attempt to collect child support from assets not covered by the bankruptcy.
- Legal actions to modify or establish a child support order.
- Child support income garnishments through a court order.
Essentially, bankruptcy won’t eliminate your child support debt, but it can buy you time. Filing may help you pay child support quicker while simultaneously ceasing collection calls and certain behaviors. A child support creditor can ask for relief from the stay to resume attempting to collect the debt. If you are in need of legal help or have any legal questions, contact an experienced Boyd Law Orange County family lawyer who also has extensive successful experience handling bankruptcy cases throughout Southern California.
Some very rare cases permit a bankruptcy to eliminate your domestic property order. Domestic property is the property you and your spouse divide during a divorce. Sometimes, a court may pass an exemption on this order, meaning this type of debt could be discharged.
How an Experienced Family Law Attorney in California Can Help
While bankruptcy doesn’t eliminate the need to pay child support, it does complicate things quite a bit. Enforced payments may become more difficult. If you’re having trouble paying child support, a support modification may be a better option than a bankruptcy filing. A modification may change the monthly payment obligation amount or put a temporary hold on your payments.
It’s important to work with an experienced family law and divorce lawyer in Orange County who knows how to navigate the complicated nuances of bankruptcy filings and child support. Boyd Law in San Diego, CA, is thoroughly experienced in family, divorce, and bankruptcy laws. Contact us today to discuss your options.