How Chapter 13 bankruptcy affects child and spousal support
Many Florida residents who file for Chapter 13 bankruptcy protection have outstanding child support and alimony debts. These financial obligations will not be canceled as a result of a bankruptcy, though the outstanding debts may not have to be paid in full. After a debtor completes the Chapter 13 bankruptcy process, obligations to make future child and spousal support payments will remain in effect.
A revision to the Bankruptcy Code in 2005 made domestic support obligations a priority for repayment in Chapter 13 bankruptcy plans. Domestic support obligations cannot be discharged in bankruptcy, and a debtor who fails to make timely domestic support payments could have their Chapter 13 case dismissed. When a person’s unpaid child or spousal support debt has been assigned to a government agency, the debtor must meet certain criteria before any portion of the debts can be discharged.
A person who owes child or spousal support may be better off filing for Chapter 13 bankruptcy than Chapter 7 bankruptcy because Chapter 13 can stop collection attempts temporarily. A Chapter 7 bankruptcy may not have the same effect on domestic support obligations. However, the temporary stay on domestic support obligations that is granted during the Chapter 13 bankruptcy process can be removed at the court’s discretion.
People who have several outstanding debts that they cannot afford to pay back may want to discuss their case with a lawyer before deciding which path to take. Not everyone qualifies for Chapter 13, and a lawyer can explain that it is designed only for debtors who have a regular and reliable source of income.