A Fresh Start with the Child or Spousal Support Lien on Your Home
The good news is that if you are behind on child or spousal support, with a resulting lien on your home, you can safely protect that home.
If you are behind on your support payments, your ex-spouse and support enforcement agencies have tremendous tools to use against you to try to force you to catch up. And if you own a home, those tools include the support lien that is very likely imposed on your home’s title. Chapter 13 “adjustment of debts” gives you a powerful tool with which to fight back.
Child/Spousal Support and Bankruptcy
Bankruptcy is admittedly limited in its ability to help deal with child and spousal support debts. But the way it can help sometimes makes all the difference.
Chapter 7 “straight bankruptcy” is not able to directly help other than to free up money so that you can better afford to pay any ongoing monthly support, and to catch up on any previously unpaid support. Any lien that you might have on your home remains throughout that time. And you have no protection from collections under that lien.
However, Chapter 13 DOES stop the collection of any support that you are behind on as of the date the case is filed. The court-approved payment plan can give you a very flexible way to catch up on what you owe. And unlike with Chapter 7, you get “automatic stay” protection from collection by your ex-spouse and support enforcement, including through the support lien on your home. So you can escape the huge pressure that these aggressive creditors often put on you. Howevr, this huge benefit comes with conditions and responsibilities, so you have to really understand and follow the rules.
The Rules under Chapter 13
Chapter 13 protects you and your home from the collection of accrued unpaid support, giving you up to 5 years to catch up.
But Chapter 13 does not stop collection of ongoing monthly support payments. So you have to continue paying those if you are still required to do so according to the state family/divorce court.
In fact it’s crucial that you pay those regular monthly payments. You must do so unless and until you reduce or eliminate that monthly support obligation through the family/divorce court. It’s crucial because if you don’t keep making those ongoing payments perfectly, you jeopardize the protection Chapter 13 otherwise provides you on collection of the accrued back support debt you owe. If you don’t pay your ongoing support, your ex-spouse and support enforcement agency will have grounds to resume collection action on that support arrearage. That would include foreclosing on the lien against home and any of the other aggressive collection actions the law normally allows against you and your assets.
The rules also require your Chapter 13 court-approved payment plan to include enough money being paid to your ex-spouse or support enforcement agency to pay off the support arrearage within the 3-to-5-year life of the payment plan.
And besides earmarking enough money in the plan, you must also actually pay the required payments into that payment plan throughout its life. If you don’t make the agreed and court-ordered Chapter 13 payments, you’re not catching up on the support payment like you’re supposed to, and so you’d likely lose the protection you’d filed the Chapter 13 case to get.
But If You DO Play By the Rules
Chapter 13 gives you time to catch up based on your budget.
During Chapter 13’s 3-to-5-year payment plan, you usually pay only a part of your overall debts. You often pay only a relatively small part of, or maybe nothing at all on, many of your debts. You would usually have the entire length of your case to catch up on your support arrearage. The time you have to catch up is very generous compared to what most ex-spouses and support enforcement agencies would otherwise allow.
You also generally can pay other high-priority debts ahead of or at the same time as you are catching up on support. For example, you can often make payments on a vehicle or mortgage arrearage either ahead of or at the same time as making payments on the back support.
The reason you usually pay most of your other debts less and sometimes nothing is that, while you must pay the full support arrearage with many of your other creditors you only pay as much, if anything your budget says you can afford to pay. So the amount that you owe in support arrearage often just reduces dollar-for-dollar the amount you pay to most of your other creditors.
And throughout this time your ex-spouse/support enforcement can’t enforce the support lien nor take any other action to collect the support arrearage.
So, if you play by the rules you and your home will be protected from a support lien foreclosure. And as long as you follow those rules you’ll be protected from all other support enforcement actions as to your accrued support arrearage throughout the three to five years that your Chapter 13 case is active. Then at the end of the case you’ll be current on your support.
If at that time you continue to owe ongoing monthly support, the support lien would likely remain but would cover only that ongoing support. Or if by that time you no longer owe monthly support, that support lien would be taken off your home at the completion of your case.