While a Chapter 7 Bankruptcy can’t discharge child support obligations, there is still relief available in the Bankruptcy Court to stop collection proceedings. Federal laws prohibit the discharge of support obligations in a Bankruptcy. Chapter 13, which is a part of the Bankruptcy Code, provides a means of restructuring your debt including back child support arrears.
Today, state enforcement agencies and private attorneys collecting past due support obligations use a number of coercive actions including suspension of driver’s license, professional licenses and occupational certificates and even denial of hunting and fishing licenses.
Loss of a driver’s license or professional license can devastate your ability to make a living. However, those actions can be stopped by filing a Chapter 13.
Chapter 13 of the Bankruptcy Code can help stop collection proceedings by an ex-spouse or state enforcement agency. Under the Chapter 13 we can file a plan that the Bankruptcy Court will supervise payment of the child support arrearage along with your other debts for a period of three to five years. During that period you must keep your current child support obligations timely paid.
One case that comes to mind was a struggling young Chiropractor who faced bill collectors for past due bills after going through an extensive divorce proceeding. While struggling to pay his rent and other bills, he got behind on his child support payments and payroll taxes. His ex-wife was threatening revocation of his license to practice as a Chiropractor, and the IRS was threatening to levy on his bank account for the past due taxes. He was facing a loss of his business and ability to earn a living. By filing a Chapter 13, we were able to stop the IRS levy on his bank account, and we also stopped the revocation of his license threatened by the state child enforcement agency. We were able to successfully propose a plan that allowed him to pay an affordable monthly payment to pay all these obligations in full over a five year period.
Since domestic support obligations are considered a priority, the plan can provide for payment of those obligations before other unsecured creditors, thereby freeing up money for the back support that was being paid to credit cards, pay day loans or other creditors. Give us a call to see whether we can use Chapter 13 to get your creditors under control, including your back support obligations.