If you’re divorced and thinking about filing for bankruptcy, you might be concerned about how it might affect your time with your children. The good news is that the benefits to your family will far outweigh any hassles if you need to file bankruptcy.
However, know that while you may be able to postpone paying some of your debts after filing for bankruptcy, there are several debt categories that a bankruptcy filing would not erase. One of them is child support obligations.
Is it true that I still owe child support after declaring bankruptcy?
Debts are categorized into two categories in bankruptcy: dischargeable debt, which you can get relief from, and non-dischargeable debt, which you need to pay regardless of your bankruptcy status. Most obligations, including significant sources of debt like credit card bills and medical costs, are dischargeable no matter if you file for Chapter 13 or Chapter 7.
However, a few debts are still nondischargeable, and one of them is child support.
Generally, once a debtor files for bankruptcy, all creditors must cease all collection efforts. This is referred to as an “automatic stay.” The automatic stay prevents any foreclosures, garnishments, bank levies, or creditors from phoning you at any time of day or night. This automatic delay, however, does not apply to the enforcement of child support or alimony collections.
How do I pay my child support payments if I am filing for bankruptcy?
No one, even in bankruptcy, can avoid their commitments to their children. To guarantee that these commitments are met, even property exempt from sale under federal law may be seized and sold.
During the bankruptcy procedure, unpaid spousal support and child support debts will be near the top of the priority debt list. In fact, it will rank higher than even delinquent taxes on the list.
If you are unable to make a payment right away, the debt does not go away. The kind of income that qualifies for bankruptcy reasons, on the other hand, varies by the kind of bankruptcy you are filing for.
In Chapter 7 bankruptcy, if your trustee sells your property, the proceeds will be used towards your child support obligations. Even if you successfully complete your bankruptcy case and earn a discharge, you will be liable for any outstanding child support payments as well as any future payments.
You can make up for missed child support payments in Chapter 13 bankruptcy. You must refund all backdated payments in full through your Chapter 13 repayment plan, and you must continue to pay your child support obligations. You must show the court that you are up to date on all alimony and child support obligations before you may receive a Chapter 13 discharge. Although it is great to have a payment plan in place, the downside is that excessive child support arrearages can result in a sizable monthly plan payment because a Chapter 13 plan can only last five years.
If I file for bankruptcy, will I lose custody of my children?
Many who are looking to file for bankruptcy while divorced may also be concerned about child custody in addition to child support. Will you lose your right to visit your children if you file for bankruptcy?
Luckily, this is not likely to happen. The terms of a child custody arrangement are not allowed to be influenced by bankruptcy. When the courts determine custody judgments for divorced parents, their first goal is to create an arrangement to provide the kid with the best possible quality of life. That is why family courts consider whether either parent has a criminal past, whether the child is secure from harm, and the child’s personal preferences.
That said, it’s important to remember that, in the eyes of the judge, the best custody arrangement is one that shows the child is nurtured and cared for. If your financial instability makes it impossible for you to provide for your children — for example, if they are not adequately fed, clothed, educated, or housed because their needs are unaffordable — the judge may decide that the child would be better off with the other parent.
Suppose you already have a custody arrangement in place and later file for bankruptcy. In that case, your arrangement will not be jeopardized by the bankruptcy filing. Suppose you or your former spouse wants to revise a custody order. In that case, you must file a petition with the court that made the original decision to modify the existing arrangement.
Mortensen Law Offices will assist you in protecting your legal rights and guiding you through the process if you are considering filing for Chapter 7 or Chapter 13 bankruptcy in Arizona. Contact us today to schedule a free and confidential case evaluation.