Navigating the maze of financial obligations is tough, especially when you’re considering a Chapter 13 bankruptcy. If you also have responsibilities like alimony or child support payments, the situation gets even more complicated.
This article aims to break down how Chapter 13 bankruptcy affects these commitments and what steps you can take to manage them effectively.
Before diving into the relationship between Chapter 13 bankruptcy and alimony or child support, let’s quickly recap what Chapter 13 bankruptcy is all about.
This type of bankruptcy allows you to restructure your debts into a more manageable payment plan.
Unlike Chapter 7, which liquidates most of your assets to pay off creditors, Chapter 13 lets you keep your property while adhering to a court-approved payment plan.
When it comes to Chapter 13, the law has a clear stance on alimony and child support: they are priority debts.
This means you must fully pay them, just like taxes and certain other obligations. Failure to stay current on these payments can result in your Chapter 13 case getting dismissed, or worse, you could face legal consequences.
When you file for Chapter 13 bankruptcy, you propose a repayment plan to the court. This plan outlines how you intend to pay off your debts over a period, usually between three to five years.
Alimony and child support payments are part of this plan, and you must show that you can keep up with future payments in addition to catching up on any past due amounts.
If you’re behind on alimony or child support payments at the time of filing, those arrears become part of your Chapter 13 plan.
This means you will pay them off over the life of your bankruptcy, alongside your other debts.
Keep in mind that these back payments don’t replace your ongoing obligations. You must continue to make current alimony and child support payments outside of the bankruptcy plan.
The “automatic stay” is one of the immediate benefits of filing for bankruptcy. It stops most creditors from taking action to collect debts.
However, the automatic stay does not apply to alimony or child support. Your ex-spouse can still take legal action to collect these payments, even after you’ve filed for Chapter 13.
One of the challenges people face in Chapter 13 is balancing the responsibility of the repayment plan with the legal obligations of alimony or child support. It’s crucial to remember that the court takes these domestic support obligations seriously.
Failure to make these payments can result in contempt of court charges, wage garnishment, or even jail time.
That’s why it’s essential to ensure that your Chapter 13 repayment plan is realistic and accounts for these payments.
Given the complexity of bankruptcy law and the severe consequences of not meeting domestic support obligations, hiring a qualified and experienced bankruptcy attorney is advisable.
They can help you draft a repayment plan that meets court approval while ensuring you’re not overburdening yourself financially.
Completing a Chapter 13 repayment plan is a significant accomplishment, but it doesn’t eliminate your alimony or child support obligations.
Unlike certain debts like credit card balances or medical bills, domestic support obligations are non-dischargeable in bankruptcy. You’ll continue to make these payments as before, even after the court discharges your other debts.
Child support is often a dynamic obligation that can change over time due to various factors like income changes or the needs of the child.
You can usually request a modification of child support payments once your Chapter 13 plan is complete and your financial circumstances have changed.
Filing for Chapter 13 bankruptcy when you have alimony or child support obligations is a complex affair that demands careful planning and legal advice.
Prioritize these payments as you develop your repayment plan, and work closely with a skilled attorney to navigate the legal landscape. While bankruptcy can offer a fresh financial start, it doesn’t absolve you from your domestic support obligations—so tread carefully to honor both your financial commitments and legal responsibilities.
It’s important to hire an experienced bankruptcy attorney as one of the steps to take when you’re facing bankruptcy and you need solid guidance and representation.
This is because there are many different types of bankruptcy. Only an experienced lawyer will know which one would work best for your specific situation.
It might seem like it makes sense to do this yourself. But most people don’t have the time or patience to understand all of the intricate details involved in bankruptcy.
That means they make mistakes by not choosing the right type, or by not filling out paperwork correctly. Both things could lead to delays and ultimately hurt your chances of getting any debt relief at all.
This is not a journey to take lightly, but it is also not one to take alone. So, if you need to file for bankruptcy, reach out to us today to start your journey with us.
If you want to learn more about the options you have and the steps to take, call us for a free consultation.
Parker and DuFresne
