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Child Support Debt and Bankruptcy

On Behalf of | Feb 8, 2022 | Bankruptcy

There are many reasons someone could fall into debt, including losing a job, suffering a serious illness, being involved in a major accident, having to take care of a sick relative, and more. Whatever the reason, having unpaid child support payments on top of your other debts is a serious issue.

Depending on the amount you owe and how long you’ve carried child support debt, you could face major legal consequences, including:

  • Having your wages or bank accounts garnished
  • Having your passport revoked,
  • Having a lien placed on your home
  • Being held in contempt of court

Bankruptcy is one option for obtaining financial relief if you have overwhelming debts. However, is it an option if you’re behind on your child support payments? Bankruptcy may be one option, but you want to speak to a knowledgeable bankruptcy attorney before you file.

With more than 100 years of combined experience, the Iowa bankruptcy lawyers at Telpner Peterson Law Firm, LLP can explain your options and help you find the best way forward if your debts have become unmanageable. Contact our office in Council Bluffs, IA, for more information.

Can I Include Child Support Debt in Bankruptcy?

When you file for bankruptcy, you’ll have to sell some of your assets to pay your creditors at least some of what you owe. The amount you’ll have to sell depends on what type of bankruptcy you file for and other factors. Once you’ve met certain conditions, some of your outstanding debts will be wiped out.

It’s important to understand that some of your debts can be cleared but not all of your debts. Federal bankruptcy laws state that certain kinds of debts cannot be discharged. Some of the debts that can be discharged through bankruptcy include:

  • Credit card debt
  • Unpaid taxes
  • Unpaid medical bills
  • Unpaid utility payments
  • A repossessed home or vehicle
  • Unpaid loans, including home mortgages

Unfortunately, unpaid child support payments cannot be discharged through either Chapter 7 or Chapter 13 bankruptcy, which are the two most common types of bankruptcy for individuals or families.

When drafting federal bankruptcy laws, Congress decided that unpaid child support payments were too important to be discharged through bankruptcy. Regardless of their reasoning, this decision can put people in a serious financial bind if they have large debts in addition to unpaid child support.

How Could Bankruptcy Help Me with My Obligations?

Just because your child support debts cannot be discharged through bankruptcy does not mean bankruptcy is of no potential use to you. If you file for bankruptcy under Chapter 7, you could still have many of your other debts discharged. Depending on your financial situation and how much of your other debts are wiped out, you might have an easier time paying your required child support after filing for bankruptcy.

Filing for bankruptcy under Chapter 13 could also be beneficial if you have child support debts. In a Chapter 13 bankruptcy case, unpaid child support is considered a priority debt. This means that if your bankruptcy petition is approved, your other debts may be lowered or wiped out to make sure you can pay back the child support you owe. Chapter 13 bankruptcy cases also allow you to create a payment plan to pay back your debts over three to five years, which may be the time you need to get caught up on your child support.

How a Bankruptcy Lawyer Could Help

While bankruptcy may be an option if you have significant child support debts, be sure to consult with a lawyer before you file. Bankruptcy may not be the best option for your situation. An experienced bankruptcy attorney can tell you whether or not it’s a worthwhile option for you.

If bankruptcy is a viable option for your case, you’ll still want help from an attorney. Bankruptcy petitions are complicated and require a lot of information before you file. A lawyer can help you make sure everything is in order. You’ll also want a lawyer present for any court hearings, as your creditors will likely be there attempting to have your petition dismissed. Having a bankruptcy lawyer present can increase your petition’s chances of being approved.

The Council Bluffs, IA bankruptcy lawyers at Telpner Peterson Law Firm, LLP have been helping people with bankruptcy issues for 70 years. We would be happy to talk to you about your options with your case.