Many clients call our office wanting to know if they can eliminate child support debt in Chapter 7 bankruptcy. Child support debt can often create the need to file for bankruptcy relief in the first place so this is an understandable question. Unfortunately, this is one debt that typically cannot be eliminated. Just like tax debt, this is something that must be paid, even when it is difficult to do so.
In fact, a failure to pay can result in the loss of a driver’s license or even jail time. With that bad news in mind, there are still options to consider and reasons to file for bankruptcy.
Options to reduce child support debt
Child support obligations are typically established by a judge at the time of a divorce. A judge will decide how much should be paid in child support based on the incomes of both parents, the number of children and other factors such as educational expenses. It is important to note that while the support obligation will remain in place until a child turns 18, it can be modified with the help of a family attorney.
The court understands that life does change and as such, there may be a need for modification in the future. While the other parent is unlikely to simply grant this, relief can be sought from the court. Certain requirements must be met to do so, including:
- Reduction in income that is sufficient enough to make paying support at its current levels difficult or impossible
- The other parent needs to be earning significantly more than they were at the time of the divorce
- A child’s needs must have changed
- There must be enough support remaining to make a modification worth the court’s time
Qualifying for child support modification
Since most people file for bankruptcy because their income levels have changed, making it difficult to meet financial obligations, the chances of qualifying for a child support modification are fairly high. The court may also recognize that since bankruptcy is an extreme measure to take, the financial reality is dire enough to warrant reducing the support obligation.
The court may also be willing to work out a payment plan for repaying any back child support. While this will not eliminate the debt, it can make it possible to catch up without suffering other penalties due to the delay in payment.
Making payments will be more affordable
Another benefit of filing for a Chapter 7 bankruptcy is having more money on-hand. Rather than needing to spend every dime on debt payments, most people have more disposable income after their unsecured debts have been eliminated. This creates a pool of money that one can use toward other expenses associated with daily living.
These expenses can include buying groceries, paying for gas and daycare and making any necessary child support payments. If the support order is adjusted downwards, the combination of a lower payment and more disposable income can make it possible to catch up and stay current.
Learn more about a Chapter 7 bankruptcy
If you have more questions about how filing for bankruptcy can impact your financial situation, call and schedule an appointment.