Bankruptcy is an incredibly useful tool for eliminating debt. However, some debts are not excusable in bankruptcy. Did you know that one such debt is child support?
Courts Treat Child Support Differently in Bankruptcy
The bankruptcy code defines child support (also known as a Domestic Support Obligation, or DSO) as an automatically non-dischargeable debt.
This makes sense. Past due child support is a very important type of debt. The bankruptcy code gives honest, but unfortunate debtors an opportunity to obtain a fresh start. However, lawmakers have provided special protections for DSOs in bankruptcy.
Bankruptcy Filers Must List All Debts
A bankruptcy filer must list all debts on the bankruptcy petition and schedules. This includes debts that are not dischargeable in bankruptcy, such as DSOs.
Why is this? The bankruptcy code requires full and complete disclosure. Past due child support is an obligation of the bankruptcy filer, and it must be listed. The bankruptcy court, trustee, and creditors all have a right to understand the full financial picture of the person filing bankruptcy.
One of the consequences is that the bankruptcy court will notify the recipient of the child support of the pendency of the bankruptcy. The Chapter 7 Trustee will also notify the DSO recipient.
On the flip side, if you are owed child support you may receive formal notice that the owing individual is filing for bankruptcy. This does not mean that they no longer owe you child support.
Bankruptcy Can Help Manage Past Due DSO Payments
Chapter 7 bankruptcy eliminates unsecured debts. This will make it easier to manage priority debts such as taxes or past DSOs.
However, Chapter 13 bankruptcy might be a better option. Chapter 13 bankruptcy allows debtors to repay their obligations over time under bankruptcy court supervision. A Chapter 13 reorganization can help a debtor get caught up on past-due DSOs in an orderly fashion.
My law firm helps bankruptcy filers with Chapter 7 and Chapter 13 cases all over Northern California. Call my office at (916) 333-2222 to schedule a bankruptcy consultation today!