The Allmand Law Firm, PLLC Difference

Unlike most bankruptcy firms in the Dallas / Fort-Worth area, Allmand Law Firm, PLLC spends the time to understand the complete financial picture for every one of our clients. We provide resources, tools and advice to address the unique needs of North Texans.

Are Child Support Payments Considered Income In Bankruptcy?

Posted By admin || 2-Jan-2012

Are Child Support Payments Considered Income In Bankruptcy?

For the purposes of the bankruptcy means test, child support payments are treated as income. For some bankruptcy debtors, the treatment of child support payments as income will push them over the maximum income threshold required to file Chapter 7 bankruptcy . If this happens, the bankruptcy debtor will need to repay some of their debts in Chapter 13 bankruptcy . So how should a debtor maneuver if they are receiving child support payments and want to file bankruptcy? Below are a few tips:

Back Child Support Payments

If a debtor is owed back child support payments, they may want to wait until after they file bankruptcy to seek payment. Because the bankruptcy means test examines the six months of income preceding the bankruptcy filing, receiving a lump sum child support payment can skew the numbers.  If back child support payments are made after the debtor's discharge they are not part of the bankruptcy estate. However, if a debtor has already begun the process for receiving back child support before filing bankruptcy, they need to report to the bankruptcy court that there is a possibility they will receive additional payments.  Failure to report possible future child support payments could serve as grounds for dismissal of the case.  Be sure to disclose all information to your bankruptcy attorney.

Exempt Status

Even if a debtor is forced to file Chapter 13 bankruptcy, child support payments cannot be used to calculate monthly payments.  Also, child support payments are exempt from creditor seizure. This means that the Chapter 13 or Chapter 7 bankruptcy debtor is free to use their child support payments to support themselves and dependents.

Questions About Bankruptcy?

Have any questions about bankruptcy? If so, we are here to help. Feel free to ask us by filing out our contact form or to set up a free consultation.
Categories: Bankruptcy
Blog Home