Monday, February 1, 2010
How Does Bankruptcy Affect Child Support?
There are two facets to child support and alimony in a bankruptcy context; both the payment and receipt of child support and alimony.
Sometimes, child support and alimony debt can become so burdensome that the parent or ex-spouse believes that bankruptcy is the only way out. Bankruptcy is a bad alternative to eliminate child support or alimony; a family law court would be a better forum to have those obligations reduced, if appropriate. Bankruptcy might help reduce other unsecured debts that will allow the child support and alimony obligations to be more affordable however.
When the bankruptcy is filed, the automatic stay halts all collection activities, except those actions to establish paternity, and actions for domestic support, child custody or visitation. In addition, the automatic stay has no effect on the reporting of overdue child support to any consumer reporting agency.
Both domestic support obligations and debts owed to a spouse or former spouse pursuant to a divorce or separation agreement are non-dischargeable in bankruptcy. Therefore, those debts remain even after the bankruptcy is completed.
Finally, in order to file for bankruptcy protection, child support and alimony obligations must be current and must be kept current during the bankruptcy case.
Therefore, bankruptcy is ineffective as a tool to eliminate child support and alimony obligations, although it might be a good alternative to reduce other debts, thereby making child support and alimony easier to afford.
What happens, however, when the person receiving child support or alimony is forced to file for bankruptcy protection? For those bankruptcy filers that receive child support and alimony, both federal law and Florida law allow the receipt of child support and alimony to be exempt from creditors and from the bankruptcy trustee. Therefore, the receipt of child support and alimony has little effect on the amount the debtor may have to pay to unsecured creditors during the pendency of the bankruptcy case.
Shawn M. Yesner, Esq.
Yesner & Boss, P.L.