According to the Witherspoon Institute, the divorce rate in the United States ranges from 40-50%. Due to that statistic, approximately 1/4 of children are living with a custodial parent. A report released by the U.S. Census Bureau cites that among those 14.4 million custodial parents in the U.S., about half of them have some type of legal or informal child support agreement in place. In addition, 88.8% of those child support agreements were formal agreements, established in court or through a government agency.
Combine these numbers with the growing millions who file for bankruptcy every year and there are bound to be questions about how child support factors into an already financially stressful situation. So what happens to child support when one or both partners file a bankruptcy petition?
Child Support in a Bankruptcy
Both parents of a child have a legal responsibility to financially care for their child. The United States Congress takes this responsibility very seriously and has decided that child support debt is too important to be discharged in a bankruptcy. A bankruptcy discharge is a court order issued at the end of a Chapter 7 or Chapter 13 case that relieves you from your obligation to pay a debt. This means that a parent who owes child support cannot escape this duty by filing for bankruptcy. It is one of a list of items that cannot be discharged.
But what if I am behind on my payments or can no longer afford child support payments?
If you are a co-parent who is behind in child support payments, bankruptcy, specifically Chapter 13, may help you get caught up on this child support obligation. For example, Chapter 13 bankruptcy allows you to organize your debts and pay back some or all of them through a convenient repayment plan. As discussed above, any pre-bankruptcy child support arrears (payments) must be included and paid off in your Chapter 13 plan. Most parents, who are in debt, would rather help their children than pay credit card bills. Therefore, filing for Chapter 13 bankruptcy can help you get caught up on your back child support while discharging more of your other unsecured debt. A parent’s obligation to support their child can not be wiped away in a bankruptcy. If a parent finds them financially strapped Chapter 13 may assist that person to reorganize their debt. Another option, in the case of a change of circumstance, may be to ask the family court to modify the child support order. That, however is done in a separate case from bankruptcy.