Many people consider filing for bankruptcy when their debts become far greater than what they can afford to pay. Bankruptcy helps you eliminate or pay off past due bills, which allows you to get caught up and start over. One question you may have when considering bankruptcy is if it will get rid of everything you owe, or if it only pertains to certain bills. Specifically, would filing for bankruptcy eliminate only credit card debt, or does it get rid of other obligated debts, like child support payments?
Can Filing for Bankruptcy Eliminate Child Support Obligations?
Bankruptcy can eliminate much of your debt, but not everything can be discharged. The bankruptcy law organizes debts into 3 different categories:
- Secured: Secured debts are backed by an asset that a creditor can take away if the debt is not paid. Examples of these debts include mortgages, auto loans, or liens from real estate taxes and civil judgments.
- Priority Unsecured: Priority unsecured debts aren’t tied to any sort of collateral, but they must be paid in full. These debts include certain taxes, fines from criminal cases, as well as spousal and child support.
- Non-Priority Unsecured: This category includes all other debts, like medical bills, personal loans that aren’t tied to a physical asset, or utility bills.
Bankruptcy court gives priority to court-ordered child support payments, so they must be paid right after secured debts are paid. The law also allows a child support enforcement agency to file a claim in bankruptcy court on behalf of a person who is owed support. That means that if you file for bankruptcy and you owe child support, your bankruptcy trustee is required to report your filing to the enforcement agency, and the agency may make a claim against you in bankruptcy court for the arrears. The person owed the support payments may also file a claim on his or her own behalf.
Each personal bankruptcy plan has its own method for paying past-due child support. Below is a basic breakdown:
Filing for Chapter 7 bankruptcy allows you to liquidate assets to pay off secured debts, and it also discharges much of your remaining unsecured debts. Because child support arrears are a priority debt, they must be paid off before unsecured debts. Chapter 7 bankruptcy is generally a 4-month process, allowing you to get rid of a huge chunk of your debt right away. This could allow you to direct your focus to your child support payments going forward, which will help you avoid falling into arrears again.
While Chapter 13 bankruptcy does not wipe out your debts as quickly, it does allow you to organize your debts into a repayment plan that is more convenient and affordable for you. Child support, like all priority debts, must be paid off in full according to the repayment plan.
How an Ohio Bankruptcy Attorney Can Help
If you are thinking about filing for bankruptcy but you have some bills that would be considered priority debts, you should contact a skilled bankruptcy attorney to go over your case. The bankruptcy attorneys at Luftman, Heck & Associates have handled numerous bankruptcy cases and can educate you on what the best plan may be to help you pay off your child support arrears and help you get a fresh start.