If you are experiencing financial difficulty, and you have a substantial child support obligation, you may have questions about whether or not a Chapter 7 or Chapter 13 bankruptcy petition can help you minimize or manage that debt. The simple answer is not directly—a child support arrearage may not be discharged in a bankruptcy filing. In addition, you will face restrictions on the use of a Chapter 13 petition to reorganize or restructure child support payments. That said, the filing of a bankruptcy may help you re-organize your finances in a way that makes it easier to meet your child support obligations.
A Chapter 7 Filing
Under the bankruptcy laws, certain obligations are identified as “priority debts.” That means that they are exempt from discharge in a Chapter 7 proceeding. However, a Chapter 7 can still put you in a better position to afford child support payments, as you can wipe out credit card debt, medical bills and certain other arrearages, freeing up discretionary income to pay child support. In any event, when your Chapter 7 petition is finalized, you will still be required to pay all past-due child support, as well as penalties and interest, but a good lawyer can help you negotiate the terms and time frames for those payments.
Chapter 13 Reorganization and Bankruptcy
With a Chapter 13 filing, you have the opportunity to work out new payment arrangements with most creditors, often for pennies on the dollar. As a general rule, though, the plan you put together must demonstrate to the court that you will be able to pay all child support arrearages by the end of the plan (typically three to five years). If you cannot show that, the court will not approve your plan.
Contact the Bridgewater Child Support Lawyers at Lyons & Associates, PC
At Lyons & Associates, PC, we bring a high level of personalized service and attention to men and women in New Jersey. For a confidential consultation, contact us by e-mail or call our office at 908-575-9777.