There are multiple types of debts that can cause a person or family to experience financial difficulties. While filing for bankruptcy can provide relief from debts, it is important to understand how different types of debts will be handled during the bankruptcy process. Understanding how domestic support obligations, which include child support and spousal support, will be affected by bankruptcy can be a crucial part of the planning process. If you are currently paying alimony or child support, you will want to work with an attorney to determine your best options for addressing these obligations and other debts you owe.

Understanding How Priority Debts Are Handled During Bankruptcy

Domestic support obligations are considered to be priority debts, and this means that they typically cannot be discharged through bankruptcy. Court-ordered child support or spousal support must be paid as required, and any missed payments will need to be made up. In addition, interest may apply to past-due amounts.

If you file for Chapter 7 bankruptcy, certain types of debts may be eliminated, such as credit card balances and medical bills. While you will still owe domestic support obligations, the elimination of other debts may free up money that can be used to pay child support or alimony. You will continue to be responsible for these payments after you file for bankruptcy, but by becoming current on your obligations, you can ensure that you will be able to maintain ongoing financial success. 

Chapter 13 bankruptcy will be handled differently from Chapter 7. In these cases, your debts will be consolidated into a repayment plan that spans three to five years. The amount you will pay toward this plan will be based on your disposable income, which is the amount left over after you pay all of your ongoing expenses, including alimony or child support payments. Any past-due amounts that you owe toward domestic support obligations may be included in your repayment plan, allowing you to repay these amounts over time. As long as you make your required monthly payments, you will stay current on your domestic support obligations, and you will not have to worry about falling behind again. Once your repayment plan is complete, other types of debts will be discharged, and you will be able to move forward successfully while hopefully avoiding large debts or other financial issues in the future.

Contact a U.S. Bankruptcy Attorney for Domestic Support Obligations

If you are considering filing for bankruptcy, it is important to understand how doing so will affect your ongoing financial obligations regarding child support or spousal support, as well as any unpaid amounts that you owe. With the help of an experienced United States bankruptcy lawyer, you can determine the best approach to take to address these issues, and you can follow the correct steps to become current on your obligations and ensure that you will be able to meet your needs and avoid financial problems.

Source:

https://www.law.cornell.edu/uscode/text/11/523