How Are Domestic Support Obligations Handled During Bankruptcy?

 Posted on April 15, 2022 in Bankruptcy

There are many types of debts that may cause a person to experience financial problems. When it becomes difficult or impossible to repay debts, bankruptcy may be the best option for avoiding serious consequences, such as a home foreclosure, the repossession of property, or legal judgments that may result in wage garnishment or liens against a person’s home. However, it is important to understand how different debts will be addressed during the bankruptcy process. Domestic support obligations such as child support or alimony are one type of debt that may need to be considered.

Domestic Support Obligations Are Priority Debts

While domestic support obligations are considered to be debts owed by the payor to the recipient, they are treated differently than other types of debts. Financial support paid by a person to provide for the needs of a child or ex-spouse may be necessary to ensure that the recipient can cover their ongoing living expenses. Because of this, a person will generally be required to continue making payments, and they will also be obligated to make up any payments that are past due.

After filing for bankruptcy, an automatic stay is implemented that requires creditors to cease any attempts to collect debts from the debtor. However, this automatic stay does not apply to domestic support obligations. A person must continue making any child support or spousal support payments that are required. 

Domestic support obligations are also among the debts that cannot be eliminated through bankruptcy. All amounts owed to the recipient must be paid in full. However, depending on the type of bankruptcy a person pursues, these debts may be handled in different ways. A Chapter 7 bankruptcy will allow a debtor to eliminate other types of debts they may owe, such as credit card balances or medical bills. This may free up financial resources to allow them to repay past-due support. In a Chapter 13 bankruptcy, past-due domestic support obligations may be included in a debtor’s repayment plan, allowing these amounts to be paid off over time. Since these obligations take priority over most other types of debts, they will be paid off first through the plan, allowing a person to become current on what is owed and continue making ongoing payments as required.

Contact Our Fort Lauderdale Bankruptcy Lawyer

If you have questions about how child support or alimony that you owe will be handled during your bankruptcy case, The Elliot Legal Group, P.A. can explain these issues and make sure you are prepared to take the correct steps to receive relief from your debts. Contact our Pompano Beach bankruptcy attorney at 754-332-2101 to discuss your case in a confidential consultation.

Sources:

https://cdn.ymaws.com/www.ncbj.org/resource/resmgr/JudgeOutreach/KRM_Impact_Of_Bankr_on_Domes.pdf

https://www.thebalance.com/child-support-and-alimony-in-bankruptcy-4154002

https://www.law.cornell.edu/uscode/text/11/362