Can I Choose Which Type of Bankruptcy to File?
Key Takeaways
- Child support cannot be discharged in any chapter.
- Chapter 13 lets you clear arrears over three to five years.
- The plan must pay those arrears in full.
- Wage withholding for support continues even after you file.
If you are someone who is behind on your child support payments, you most likely understand how overwhelming this financial burden can be. Fortunately, there may be a way for you to catch up on those payments while keeping your home, car, and other assets that are of great value to you. Please read on and reach out to our experienced New York bankruptcy attorney to learn more about how our firm can help you through the legal process going forward. Here are some of the questions you may have:
Can I File Chapter 13 Bankruptcy to Catch Up on Child Support?
There are several benefits to Chapter 13, especially if you are someone who is far behind on your child support payments. Though Chapter 7 is a more straightforward and often cheaper process, if you are way behind on payments, it is most likely not the best option for you.
With that, however, Chapter 13 offers something that Chapter 7 cannot: a structured way to clear the arrears over a three- to five-year period while you keep your home and vehicle. Chapter 7, which is a liquidation process, has no mechanism to catch up on anything.
What Actually Happens to the Arrears
Outstanding child support is considered a first-priority debt, which carries two consequences that you should familiarize yourself with prior to filing:
- Your plan must pay the arrears in full. Unlike credit card debt, there is no percentage you can pay before the rest is discharged.
- You must remain current on your ongoing support payments while the plan runs. The court will not confirm a plan unless you are up to date, nor will it grant a discharge at the end of your case unless you have certified that everything falling due has been satisfied.
As such, Chapter 13 turns an enforceable arrears figure into a more manageable monthly number to be paid over the course of years. However, this does not reduce what you owe.
Does Chapter 13 Halt the Collection of Unpaid Child Support?
One of the most common questions we are asked is whether filing bankruptcy can stop child support payments forever. The answer, simply, is no. Child support payments are known as “non-dischargeable” debts, meaning that they cannot be discharged through bankruptcy. In fact, child support may only end if the family court decides so, or if your child reaches adulthood in the eyes of the court.
It is also important to understand what filing does and does not pause. The automatic stay carries an express exception for domestic support, so several matters will continue, regardless of your filing:
- Wage withholding under an existing support order will continue
- Support may still be collected from anything that falls outside of the bankruptcy estate
- A support order may still be established or modified, and paternity actions will continue
- A license suspension and tax refund interceptions will not be stayed
What filing does is prevent the enforcement pressure aimed at collecting the arrears out of estate assets, and provide a plan that addresses these matters on a schedule you can meet.
However, that being said, Chapter 13 bankruptcy does allow you to rearrange your payments via a 3-5 year plan. Simply put, this means that the moment you file for Chapter 13 bankruptcy, an automatic stay takes effect and blocks your other creditors from collection activities for the remainder of that three- to five-year period, which frees up income you can direct at the support you owe.
Contact Our Experienced New York Bankruptcy Law Firm
Filing for bankruptcy can be an incredibly stressful and overwhelming experience for many individuals. However, with the assistance of an experienced bankruptcy attorney at the Law Offices of Allen A. Kolber, Esq., you do not have to navigate these matters on your own. Our firm is dedicated to helping you through these complex times. If you’re ready to file for bankruptcy, do not hesitate to contact our firm today.
