In the United States, when debtors get too far behind on their debts, they have the option of filing Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is known as the “debt liquidation bankruptcy,” and it’s basically reserved for low-income bankruptcy filers. Often, the unemployed or underemployed will file for bankruptcy under this Chapter. With a Chapter 7 bankruptcy, many types of debts are erased or wiped out. Meaning, once they’re discharged, the debtor is not liable to pay them.
Not all debtors qualify under Chapter 7. Those debtors who have a decent income may not qualify for Chapter 7. Instead, they may have to file a Chapter 13 bankruptcy where they pay off all or just a portion of their debts over 3 to 5 years through a repayment plan.
Since it’s not uncommon for non-custodial parents to owe thousands in back child support, it’s understandable why they often ask, “Can my child support arrears be included in my bankruptcy filing?” Read on as we explain whether child support can be reduced or eliminated through Chapter 7 and Chapter 13 bankruptcy.
Child Support Can Not Be Reduced or Eliminated
It doesn’t matter if you file a Chapter 7 or a Chapter 13 bankruptcy; child support debt cannot be reduced or eliminated through bankruptcy because Congress decided it is too important to let it be included in bankruptcy. Even though child support is technically an “unsecured debt” like credit cards, it cannot be erased through Chapter 7. The same goes for spousal support and recent taxes.
If you file a Chapter 13 bankruptcy, you still have to pay what you owe in child support, however, since child support is a “priority debt,” it can actually reduce how much a debtor pays toward other non-priority debts, such as credit card debts or medical debt.
For instance, if you owe $10,000 in child support and $10,000 in credit cards, the child support debt may actually reduce what you have to pay to your credit card companies. So, filing a Chapter 13 may still be beneficial to you in the long-run.
Next: Can I Avoid Child Support if I’m Disabled?
Do you need help with a child support case? If so, contact Claery & Hammond, LLP to schedule a free case evaluation with a member of our legal team.