No matter which type of bankruptcy you choose, there are certain types of debts that will not discharge. Back owed child support is one of these types of debt. If you fall behind on court ordered child support payments, your ex-spouse can have the support enforcement agencies collect money from you. But beyond collecting money, this agency can suspend your driver’s license – even a commercial driver’s license – and they can seize your tax return. The support enforcement agency has many tools they can use against you. A Chapter 7 bankruptcy will not help you in this situation as collection efforts because of back owed child support will not cease. However, a Chapter 13 can. A Chapter 13 is the wage earner’s plan and allows you to pay back what you have missed.
Take a recent client of mine – Adam (name changed to protect anonymity). When Adam’s child support of $750.00 per month was ordered by the Court, life was looking good for Adam. He had a steady job and was able to meet all of his obligations. Then over the next few years, life happened. Things started spiraling out of control. Adam lost his job and was on unemployment for about a year. When he finally found a new job, his income was restored to what he had been making before unemployment, but it was too late. Adam had fallen behind on his child support for about a year, for a total of $9,000. Adam’s ex-spouse was not happy and had begun collection efforts through the state support enforcement agency. During this time, Adam had fallen behind on his credit card payments and medical bills as well. He was on the verge of being garnished at his new job! When Adam came to see me, he thought his situation was hopeless. But we talked and decided a Chapter 13 was right for him.
Going forward, Adam will pay his monthly child support obligation of $750.00 per month. In addition to this amount, he will pay the Trustee appointed to administer his case a payment of $350.00 per month for 60 months. This $350.00 payment will go towards catching up his child support arrearage and paying that amount in full. But it does not stop there! This amount will also go towards his past due credit card debt and medical bills – these people will receive roughly ten cents on the dollar. This Chapter 13 will not only stop the collection efforts of his ex-spouse and the support enforcement agency, but will also stop the pending wage garnishment. Adam can breathe again, because we now have a clear cut plan of where he is going and how he can catch everything up. When he finishes the Chapter 13, Adam will be caught up on child support and will be debt free!