For those who are owed or paying child support prior to filing for bankruptcy, the idea of discharge can be either terrifying or welcome. Regardless of which one applies to you, though, the truth of the matter might be altogether different than you imagined.
Child Support Debt is Non-Dischargeable
Child support is a priority debt. It is non-dischargeable during any type of personal bankruptcy.
In simpler terms, this means that a person’s obligation to pay child support does not stop as a result of bankruptcy. Whether they are current up to the point of filing for bankruptcy or are facing substantial arrears, they will still be expected to pay every dollar of the total amount owed.
What does this mean for you if you are the one who owes child support payments? It means that bankruptcy will not be a reprieve from your child support obligation – and that you should plan accordingly for that obligation.
The fact that child support is considered a priority debt is not just nomenclature. It means that it is the top priority for both you and the court when repaying outstanding debt or making regular payments as they come due. It takes precedence over any other type of debt repayment, regardless of the amount owed.
Likewise, this type of debt is not only non-dischargeable, but it is also not eligible to be included in an automatic stay. That means that while some other types of debt – including back tax debt or student loan payments – can have collection attempts frozen during your bankruptcy, child support debt cannot.
Additionally – as if there was not enough to consider – any income you are currently bringing in is subject to seizure through wage garnishment for child support. Bankruptcy will not stop this, either.
What Happens to Child Support You are Receiving During Bankruptcy?
If you are receiving child support payments and need to file for bankruptcy, you may be concerned about whether those payments will be impacted. Nearly 40% of child support payments due in the United States go unpaid, so it is no wonder parents who are owed these payments while dealing with bankruptcy would be concerned.
Child support payments received prior to filing for bankruptcy are considered income. Therefore, they should be included in your means test. If payments are still being made, they will also count as income throughout the bankruptcy itself.
Back child support payments – those which you are owed but have not yet received – are considered an asset. They will also have to be considered as part of your bankruptcy, especially if the bankruptcy chapter you are filing for requires access to these assets by the trustee to recover lost costs.
This may all sound very scary, but there are a few things that protect parents receiving child support during bankruptcy.
First, Illinois offers a bankruptcy exemption for both child support and alimony payments. This means that these payments will not be counted toward your income, up to an amount considered reasonable for support. This “reasonable amount” typically covers most or even all of what you receive.
Secondly, it is unlikely that your bankruptcy trustee will recover the back child support you are owed. After all, if the court has not successfully recovered this amount for you, they are not likely to waste their time trying to do so.
Let Our Legal Team Outline Your Obligations and Protect Your Rights
Bankruptcy is already a difficult and confusing process. Introducing the complexities of issues like family law, divorce, child support, and related concerns only serve to make it more so. At the Law Offices of David M. Siegel, we understand this – and we are in your corner.
Do not let this process add undue stress to an already stressful time in your life. Let our experienced team of Illinois bankruptcy attorneys help you make sense of things – and keep you safe within the bounds of the law.
Whether you owe child support or are currently receiving it, your bankruptcy lawyer will outline your responsibilities and rights so you can make the best decisions for your family and finances. If you are ready to learn more about how we can help you get and keep the money that is yours, call us for a free consultation today!
