Chapter 7 “straight bankruptcy” doesn’t stop aggressive collection of back support. But Chapter 13 does, and protects you while you catch up.
Chapter 7’s Very Limited Help
Regular Chapter 7 bankruptcy does only one thing to help if you are behind on your child or spousal support payments: it gets rid of your other debts so that you can better catch up on the support.
If you are behind and your ex-spouse or the local support enforcement is starting to garnish your wages or bank accounts, or is threatening to take away your driver’s license, or your occupational or professional license, this is the only way that Chapter 7 bankruptcy can help.
But this kind of help should be considered carefully. In some jurisdictions the support enforcement agency is quite willing to enter into payment arrangements to cure support arrearages. Talk with your attorney about this. If as a result of your Chapter 7 filing you would be able to realistically and reliably pay both your ongoing monthly support payment AND an agreed upon monthly catch-up payment, then that may well be the way to go.
But that combination is rare. Many people are not helped enough on a monthly cash flow basis by a Chapter 7 filing to be able to pay both their regular support payment and another chunk towards catching up on the arrearage. Many ex-spouses or support enforcement agencies are not so amenable as to agree upon a sensible monthly amount to be paid towards the arrearage.
Also, often it’s just too late for all that because a garnishment or license suspension is already in process. Since a Chapter 7 does NOT stop collection efforts on back support, it doesn’t provide the help most needed.
Chapter 13’s Extremely Important Protection
Collection efforts on back support ARE stopped by a Chapter 13 filing. This protection is hugely important because those collection efforts can be extremely harmful—especially ones that would result in your loss of a driver’s/occupational/professional license. The protection is also important because it works instantaneously—effective immediately upon the filing of your Chapter 13 case—and unilaterally—effective without requiring negotiations with or consent of the ex-spouse/support enforcement.
But the Protection is Highly Conditioned
Although Chapter 13’s protection kicks in immediately, you have to strictly maintain a number of conditions in order for that protection to persist:
- You must keep absolutely current on the monthly support obligations going forward
- Your Chapter 13 plan must provide for payment of the entire support arrearage before the case is completed
- You must then keep current on your Chapter 13 plan payments so that in fact the support arrearages end up being paid off during the course of the case.
If at any point during your Chapter 13 case you do not meet any of these conditions, your ex-spouse or support enforcement agency can ask the bankruptcy judge to allow the prior collection efforts against you to resume or new ones to begin. If you have in fact not met the required conditions, most likely the judge would allow the collection to resume, which would likely jeopardize your successful completion of the case.
Only Chapter 13, and not Chapter 7, can stop the extraordinary collection efforts against you and your assets for payment of support arrearage. To maintain this protection during the three-to-five-years of a Chapter 13 case, you have to consistently meet some conditions. But as long as you do, you will have an extraordinary solution to an otherwise very difficult problem.