Child Support And Bankruptcy
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When a couple divorces, their financial situation may change dramatically. Whereas before, one household was supported by two incomes, after a divorce there are two households now being supported by two incomes. This is especially true when children are involved. The custodial parent bears more of the financial burden of daily care of the children, while the non-custodial parent is assessed with child support payments. Each parent is expected to bear more financial burden with less income. However, the most important thing is to maintain your financial health, while doing what is of greatest benefit to your children. Regardless of what has occurred, or what will in the future, it is the children who should be affected least by the decisions of you and your spouse.
If you are unable to make it financially due to the added cost of child support payments, it\'s imperative that you speak with someone who may answer questions that are specific to your circumstances. In addition, this individual should have a firm grasp of bankruptcy law, as well as family law.
Under these circumstances, it is not surprising that many people file bankruptcy soon after a divorce. Bankruptcy, of course, does not excuse a non-custodial parent from paying child support, either past due or currently due. What it can do, however, is to manage creditors in such a way that child support payments become, by law, the most important priority for the non-custodial parent to meet. In a Chapter 7 case, in which assets are liquidated to pay debts, the first debt discharged is for child support. In Chapter 13, where the court sets up a payment plan, child support obligations are the first to be met through the monthly payments. If the full debt for child support is not paid as part of a disbursement, it remains the debt of the debtor and still has to be paid.
Certain bankruptcy provisions that are helpful to be familiar with are the provision that provides an automatic stay on creditor actions. Actions that are exempted from an automatic stay provision are those to establish or modify maintenance, alimony, or support. A creditor does not need to seek relief from the stay. When filing for bankruptcy, the debtor has to file a schedule or assets, exempt property, liabilities, current expenditures and income, and a statement of financial affairs. Property that is considered exempt from creditors can still be reached for the enforcement of child support.
One important exception to this rule is when part of the divorce decree mandates support to the former spouse as part of support for the children. This amount may in some cases be discharged since it is not considered direct support to the children. The other exception is if a third party is supporting the children; in a bankruptcy, that third party reserves the right to act as any other creditor to get payment from the non-custodial parent.
The custodial parent may be listed on the bankruptcy proceedings as a creditor. In that case, they may be notified of legal proceedings such as hearings and payment plans. The custodial parent is responsible for protecting the interests of himself or herself and the children in their custody, so it is advisable to meet with an attorney familiar with both bankruptcy and child support law.
The non-custodial parent, in finding himself or herself in a bankruptcy action, needs to understand that they are still expected to pay child support. But if the payments are burdensome, they can request that the payments be lowered. They should not ever take it upon themselves to simply lower payments, however; that should always be left to the courts.
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