Can I Reduce Domestic Support Obligations In Bankruptcy?

Reducing Domestic Obligations In BankruptcyDebtors who owe domestic support obligations such as child support and alimony will not be able to discharge those debts in bankruptcy. However, a debtor who owes back child support or alimony may be able to use bankruptcy to make repaying those debts easier.  For example, in a Chapter 13 bankruptcy a debtor who owes a large lump sum of back child support payments can avoid making one big lump sum payment if they don’t have enough assets.  Instead, they can make “catch up” payments over the course of the Chapter 13 bankruptcy period which is 3 to 5 years.  And don’t forget that during a Chapter 7 bankruptcy, unsecured debt is discharged freeing up more income for the debtor to make payments on priority debt such as child support and alimony.  A matter of fact, both child support and alimony must be paid first before even taxes during bankruptcy.  This is also true during a Chapter 13 bankruptcy; but of course the debtor may still need to make at least partial payments on the unsecured debt obligations; but only after their priority debts such as child support and alimony have been paid.

If you are a debtor who owes domestic support debts such as child support and alimony, bankruptcy can offer you the opportunity to effectively pay down that debt by freeing you from other financial obligations and freeing up income.  Before you file bankruptcy, make sure that you have kept an accurate account of what you have paid on those domestic support obligations because there have been situations in the past where claimants have submitted inaccurate claims which inflate the amount a debtor owes.  By keeping track of your payment record you can protect yourself from the negative impact of inflated claims during your bankruptcy case.

By | 2017-12-13T03:56:08+00:00 June 6th, 2010|Bankruptcy, Divorce and Bankruptcy, Managing Your Finances|Comments Off on Can I Reduce Domestic Support Obligations In Bankruptcy?