If you fall behind on support payments, it MIGHT make sense to file bankruptcy right when you can afford to begin making them again.
What Bankruptcy Can and Cannot Do
Bankruptcy does NOT write off past due child or spousal support.
It also does NOT have the power to lower your present and future support payments. If your financial circumstances have changed (and/or your ex-spouse’s have) you need to go back to the domestic relations court which ordered you to pay support in order to change your support obligation going forward.
But the one help that bankruptcy CAN give you regarding support obligations could—in the right circumstances—be huge. Bankruptcy—Chapter 13 “adjustment of debts” in particular—can buy you time and flexibility for catching up on PAST DUE support obligations, while protecting you from your ex-spouse and/or your local support enforcement agency as to those obligations.
This blog post explains some of the crucial timing considerations which will help you take full advantage of this one extremely beneficial way that bankruptcy can help here.
The Strict Timing Rules
This is what you need to know:
- Protection against your ex-spouse/support enforcement for collection of the past due support goes into effect the moment your Chapter 13 case is filed.
- Once your case is filed, you MUST make all ongoing support payments, starting with the next one that is due.
- There is no protection for you regarding your ongoing support payments—you must make all support payments that become due after your Chapter 13 case is filed.
- If you do not make any of the ongoing support payments, you will lose the protection from collection of the past due support.
The Lesson of These Timing Rules
The upshot of these timing rules is that you should file a Chapter 13 case to deal with your past due support payments (along with your other debt problems) just as soon as you would be able to make your REGULAR MONTHLY support payments.
If you owe back payments but don’t have the income to make the regular payments, filing a Chapter 13 case at that time won’t work for three reasons.
- If you don’t make the first monthly support payment that comes due after your case is filed, your ex-spouse and/or support enforcement agency can file a motion with the bankruptcy court to be allowed to start or resume collecting on the past due support. The court would likely grant such a motion, on the argument that if you can’t make the first of those regular monthly support payments, you’re not a good candidate for making them throughout the course of the 3-to-5 year Chapter 13 case. Losing your protection from collection of the past due support would defeat a primary purpose of your case. And in any event the resumed collection of past due support would very likely make it impossible for you to meet the remaining terms of your Chapter 13 case.
- Even worse, if you fail to make a regular monthly support payment, your ex-spouse and/or support enforcement agency could also file a motion to dismiss (throw out) your Chapter 13 case entirely. If successful, that would allow ALL your creditors to resume their collection activity against you.
- Because under Chapter 13 you can stop collection actions on your past due support but not on your current support, filing after a particular monthly payment becomes past due enables you to pay that over the course of your 3-to-5-year Chapter 13 case, instead of immediately when it is due. That can help your immediate cash-flow in the weeks and months before filing the case, making more likely that you will be able to start paying the monthly support payments immediately after filing.
Chapter 13 May ENABLE You to Pay Your Current Monthly Support Payments
If you are thinking that holding off on filing a Chapter 13 case until you can afford the monthly support payments won’t work because you’ll NEVER be able to afford those payments considering the financial pressures of all your other creditors, go see a qualified bankruptcy attorney right away.
In many situations you WILL be able to afford the regular monthly support payments as soon as you file bankruptcy because you will not have to pay most or all of your other creditors each month. Chapter 13 in particular is designed to enable you to pay creditors which are legally more important, even if doing so means paying less—or sometimes even nothing—to your other creditors.
You may also be able to lower, or even end, your monthly support payments because of changes in your and/or your ex-spouse’s financial circumstances. As mentioned above, that is not something that the bankruptcy court can accomplish for you. Instead you have to go back the domestic relations court that set up the support obligation in the first place. But once you and your bankruptcy attorney carefully review your income and expenses, you will likely have a better idea whether you will be able to reduce the amount of your ongoing support payments.
