There are many reasons why someone may need to file for Chapter 13 bankruptcy relief. Some individuals get behind on mortgage payments or car loan payments. Other individuals may owe substantial medical debts or tax debts. In some cases, an individual may file Chapter 13 because of child support arrears or back alimony payments. Even though some of these debts may not be dischargeable in bankruptcy, that does not mean that filing Chapter 13 may not help resolve the debt problem.
Can I Get Rid of Back Child Support Payments in Chapter 13?
Domestic support obligations (child support payments and spousal support payments) are not eligible for a discharge in bankruptcy. You cannot get rid of back child support payments or alimony payments regardless of whether you file under Chapter 13 or Chapter 7. However, filing a Chapter 13 bankruptcy can help you avoid jail time and other penalties for back child support payments.
Filing Chapter 13 for Child Support Arrears
When you get behind in your child support payments, you could face severe punishments. Depending on your state laws, you could be confined to jail, lose your tax refunds, and have your driver’s license suspended for back child support obligations. In some states, you could have wages garnished for child support arrears.
Filing a Chapter 7 bankruptcy will not help with child support or alimony payments. You can discharge many unsecured debts through bankruptcy, but you cannot get rid of child support or alimony payments.
However, filing a Chapter 13 case can help. Through a Chapter 13 case, you can catch up child support arrears or back alimony payments over a three to a five-year bankruptcy repayment plan. The Chapter 13 trustee receives your bankruptcy payments each month and uses a portion of those payments to catch up child support arrears. At the end of the Chapter 13 plan, your child support is current. You don’t have to worry about going to jail, losing your tax refunds, or having your driver’s license suspended.
How Does Your Chapter 13 Plan Payment Account for Arrears?
You may be wondering whether you can afford a Chapter 13 payment plan and what are the pros and cons of a Chapter 13 bankruptcy. See the calculator below that uses US bankruptcy forms to estimate your Chapter 13 plan payment, see pros and cons, and compare Chapter 13 to other debt-relief options:
You Must Remain Current on Future Child Support Payments in Chapter 13
Your Chapter 13 plan requires that you remain current on all future domestic support obligations. If you miss future child support payments, your Chapter 13 case could be dismissed. You will face the same potential penalties for child support arrears that you did before you filed a Chapter 13 case.
Before your Chapter 13 case is closed and you receive your bankruptcy discharge, you are required to sign an affidavit stating that all child support and alimony payments are current.
Other Benefits of Filing Under Chapter 13
Chapter 13 offers many benefits in addition to helping with child support arrears or back alimony payments. By filing a Chapter 13 bankruptcy case, you can:
- Stop repossessions and foreclosures
- Stop wage garnishments
- Keep your home, car, and other property
- Get rid of back child support and alimony payments
- Get rid of other non-dischargeable debts, such as personal income taxes
- Lower the amount you owe on your car if you meet certain requirements
- Get rid of a second mortgage, if you meet certain requirements
- Protect property that would be at risk of being sold by the bankruptcy court under Chapter 7
- Get rid of most unsecured debts for a small percentage of what you owe to those creditors
- Get a fresh start to improve your financial wellbeing
- Avoid depleting savings, retirement accounts, and home equity to pay debts that you cannot afford to pay
Filing Chapter 13 is a big decision. There could be consequences of filing Chapter 13 that might be a disadvantage. Even though you might be able to get rid of child support arrears and back alimony payments, there could be risks that you need to review and consider. Before filing bankruptcy, it is wise to seek advice from an experienced bankruptcy attorney.
Are You Struggling with Debts You Cannot Pay? If so, Ascend might be able to help. We offer a variety of services related to debt relief. Learn more about your debt-relief options and how you can get out of debt. If you are ready to explore options to become debt-free, get started now to see if Ascend is a good fit for you.