Crucial Question: Can Bankruptcy Write Off or Reduce My Support Obligations?
No. The bankruptcy court respects and doesn’t change the support decisions of your divorce court. But bankruptcy can still help.
Child and Spousal Support: Very Special Debts
Support obligations are an extraordinary type of debt. Support is treated in the bankruptcy law as virtually sacred, with more protection for the “creditor” than any other category of debt.
Bankruptcy Does Not Write Off Support
If you owe child or spousal support based on a separation or divorce decree, or some other court order, you cannot discharge (legally write off) that obligation in any kind of bankruptcy. Some kinds of divorce-based debts can be discharged under Chapter 13—the ones that aren’t “in the nature of alimony, maintenance, or support.” But support can never be discharged.
Extremely Limited Protection from Collection of Support
The “automatic stay,” which prevents creditors from pursuing you and your assets, mostly does not apply to support obligations.
The ongoing monthly support obligation continues, unaffected by your bankruptcy filing. Your ex-spouse or support enforcement agency can keep on collecting that monthly support payment by whatever means the law normally allows, without skipping a beat.
If you owe back support payments, a Chapter 7 “straight bankruptcy” filing would have no effect on any collection efforts against you—even such aggressive ones as a suspension of your driver’s license and/or occupational/professional license. Those could be stopped by a Chapter 13 “adjustment of debts” filing but only under certain circumstances. (See our upcoming blog post about that.)
A bankruptcy filing also does not stop a court proceeding to establish or modify support, or to establish paternity which could lead to a determination of a support obligation.
The Highest “Priority” Debt in Bankruptcy
Support obligations are the very highest priory type of debt—ahead even of income taxes.
In a Chapter 7 case that means that in the (unlikely) chance that you own something which is not protected by property exemptions, so that you would have to surrender it to the bankruptcy trustee, after it is sold the very first debt that would be paid would be whatever you owed in support at the time your bankruptcy case was filed. This means that the support obligation is paid in full before any other creditors receive a dime. (This can be used to your advantage in certain select situations, as explained in an upcoming blog post.)
In a Chapter 13 case you have to keep current on your ongoing support or your case will likely be dismissed—thrown out. Before the end of your Chapter 13 case, you must also pay in full whatever back support you owed at the time when your case was filed. And you can’t successfully finish your case and get a discharge of the rest of your debts without certifying that you are current on all support obligations—both the ongoing and all back support.
Bankruptcy Itself Cannot Reduce Ongoing Support Obligations
Even though the bankruptcy court is a federal court and divorce courts are state ones, the bankruptcy system effectively has no jurisdiction in strictly family law matters like determining the appropriateness and amount of child and spousal support. The bankruptcy court does not get involved in that.
That means that the only way to reduce your ongoing support amount is to go back to the state court that ordered support. Doing so may be very worthwhile if your income has gone down since the support amount was determined, or if it has gone up for your ex-spouse, or if there have been some other significant change(s) in your financial and other circumstances (such as where your child is living, whether he or she is in school, etc.).
Although it would be much easier for you if you had a domestic relations attorney helping you with this, if you absolutely can’t afford an attorney it may still be worthwhile to try. In most states there is a quite rigid formula that is applied to determine whether you have to pay support and how much. And you may be able to get some help from local or national advocacy organizations. So reducing your support amount may be more straightforward than you fear.
Bankruptcy has significant limitations on how it can address child and spousal support obligations. It’s important to understand those limitations. That’s been the focus of this blog post.
But nevertheless bankruptcy can help in significant ways, ways that can make all the difference. This blog post is already too long to dive into these today, but we will in the next few days.