A bankruptcy filing can be a great way for you to get rid of the debt and to start the financial life afresh. But, there are some debts, like student loans or child support payments, which are not eliminated in bankruptcy. However, the good news is that you might be able to catch up with your missed child support payments, through a Chapter 13 repayment plan.
Reason for Elimination of Child Support Payments in Bankruptcy
According to Congress and the federal government, some debts like child support payments are too important to be unfairly eliminated by filing for bankruptcy. Child support payments are ordered by the court and that money is meant to be spent on the welfare of the child.
Debts that cannot be eliminated by filing bankruptcy are usually known as priority debts. Thus, child support payments are priority debts that be eliminated neither by Chapter 7 nor by Chapter 13, and a debtor will still be responsible for paying them even after getting a bankruptcy discharge. In Chapter 7, priority debts, especially child support payments, are meant to be paid before any other payments are made to the creditors.
A Chapter 13 bankruptcy repayment plan for 3 to 5 years can help you in reorganizing your debts and catching up with your missed child support payments. However, the bad news is that child support can cause an increase in the monthly payments of the debtor. Since the debtor is supposed to repay the complete amount of missed child support within 3 to 5 years, the monthly repayment plan of that debtor might be higher than the repayment plan of an average person.
In addition to this, the debtor will have to continue to make the current child support payments even while catching up on the missed payments. Thus, depending on the number of missed child support payments, this portion of the repayment plan can be equal to 2 or more child support payments. Before getting a discharge in a Chapter 13 bankruptcy, the debtors will have to certify that they are paying the alimony and/or their child support payments on time.
Does an Automatic Stay Apply to Child Support Payments?
After the filing of bankruptcy, an automatic stay is granted to the debtor by the court. An automatic stay prevents creditors from collecting or contacting debtors about the debt. In case the creditor does not want to discontinue receiving payments from the debtor, he will have to first take permission for it from the court by filing a petition for the same. An automatic stay is not applicable to child support payments.
In an automatic stay, there is no prohibition of:
- Legal proceedings to start or change a child support order;
- Collection of money for child support from the property which does not come under the bankruptcy estate;
- Income with holdings for the payment of child support pursuant to a court or an administrative order.
To learn more about the child support payments and the filing of bankruptcy while having such obligations, visit Recovery Law Group or call on 888-297-6203.