Whether you file for bankruptcy under chapter 7 or 13, discharging a domestic support obligation is not possible. However, filing for bankruptcy can help you to reduce your overall debts which can ultimately help you pay off your support obligation.
1. How to manage your monthly support obligation while you file for bankruptcy – When you file for bankruptcy, all your payments (excluding a few) go on automatic stay – which is that the creditors cannot harass you anymore for payments until the court passes a judgment. However, the stay does not include a domestic support obligation. Since all this matter comes under the state’s family law jurisdiction and no one but them can reduce or change the amount).
2. How to deal with arrears when you file for bankruptcy – The treatment of the arrears totally depends on which chapter of bankruptcy you file under.
- Chapter 7 – Filing under this chapter will not help you get rid of your arrears and you will still need to pay it in full after the case is over. However, if your property is sold off the trustee, the funds will be used to pay off your support obligation.
- Chapter 13 – Since domestic support is non-dischargeable, you will need to continue paying these even during your Chapter 13 Repayment plan. In fact, you must also continue paying the arrears over a period of a 3-5 year plan.
3. How to Disclose the Support details in your Bankruptcy paperwork – It is important that you list all the details of the money you owe as domestic obligation when you file for bankruptcy. You will need to include the details as under –
- Schedule E/F: Creditors who have unsecured claim in Part 1 – You will need to include all details like name along with the address and the amount you owe in full as well as the remaining balance here.
- Financial Affairs – Again under this section you will need to include the details of the domestioc support that you pay along with information about your divorce or lawsuit that is going on.
- Means Test – Under this section also you will need to disclose all payments due.
Domestic Support Obligation – A Boon or Bane for Bankruptcy Qualification
Depending on the chapter under which you file, the treatment of bankruptcy domestrioc support obligation will vary. It generally tends to help people filing for bankruptcy under chapter 7, while on the other hand, can be problematic for chapter 13 filers.
- Chapter 7 – Under this chapter, you will automatically qualify if your gross income is lesser than the mediam income. This will be calculated based on your means test result. Based on the test, few of your expenses are lowered. Also, domestic obligation is a criterion based on which you can easily qualify for bankruptcy under chapter 7.
- Chapter 13 – This can get tricky unlike chapter 7. Since, under chapter 13, not only will you have to continue paying your domestic support obligation, but, you will also have to pay your arrears through a 3-5 years repayment plan.
Meeting Of creditors
Anyone who files for bankruptcy has to compulsorily attend the 341 meeting or the meeting of creditors. This meeting is arranged by the trustee wherein you have to confirm all the details and the paperwork as submitted by you.