Whether you are entitled to receive child support or you’re the parent who owes child support, it is beneficial to know what happens when someone files for bankruptcy in Nebraska owing child support.
In Bankruptcy, child support is called a Domestic Support Obligation.
What is a Domestic Support Obligation?
A Domestic Support Obligation, or Child Support, is a legal order from a court requiring one parent to provide financial compensation to another parent for the care and support of their child or children. It results from family law cases under a dissolution of marriage (Divorce) or paternity actions.
In Nebraska, technically both parents contribute child support. Nebraska has a formula that calculates each parent’s share of the support of a child based on their income and other factors, such as length of custody, payment of insurance, etc. It is assumed that the parent with primary custody will use his/her own funds to care for the child. The non-custodial parent pays their portion of the support to the primary custodian.
If I file for Bankruptcy can I wipe out Child Support?
Bankruptcy is a powerful tool to get rid of overwhelming debt and give someone a chance to start over. While Bankruptcy does discharge, or wipe out, significant debts such as credit cards, medical bills, personal loans, and lines of credit, it does not discharge child support that you may owe. The reason makes sense. That money is for the care of your child. You have a responsibility to care for your children. It would harm your child if you were allowed to wipe out your obligation to pay for their support.
Can I get a break from paying Child Support if I file for Bankruptcy?
There are certain debts that are not typically discharged in Bankruptcy. Student loans and taxes are the most common. With these types of debt, a Bankruptcy filing will usually create a short pause in the requirement to repay. This is called a stay in Bankruptcy. While in Bankruptcy, with some exceptions, you will not be making payments on these excluded debts.
Child Support is different. You will be required to continue paying it while in Bankruptcy. Regardless if it is a current obligation or back support, called child support arrears, you are responsible to continue to pay for support.
There is one exception.
A Chapter 13 Bankruptcy, a type of bankruptcy where a debtor pays back some or all debts through a convenient repayment plan, does provide some relief in cases where there are child support arrears.
Within the repayment plan, child support arrears will be given a higher priority than other general unsecured creditors. The goal of Chapter 13 Bankruptcy is to be completely current on child support at the conclusion of the bankruptcy.
What do I do if I am owed child support?
If your child’s other parent owes a domestic support obligation, what you need to do when they file bankruptcy depends on the current circumstances.
Debtor files bankruptcy but is current on domestic support obligation
If the other parent files for bankruptcy but is current on their obligation to pay child support there is nothing that needs to be done immediately. In a Chapter 7 bankruptcy, you will be notified of the filing but you do not need to do anything. In a Chapter 13 bankruptcy, you will also be notified of the filing. You do not need to do anything at first. You do need to notify the bankruptcy court if at any time the debtor begins to get behind on their regular child support obligation.
Debtor files Chapter 7 Bankruptcy and is behind on child support
A debtor filing chapter 7 who is behind on child support doesn’t require action. If you are trying to collect through child support enforcement you may continue to do so. Sometimes an unknowledgeable family law judge will halt enforcement when a bankruptcy is filed. In those instances, you would need to get relief from the bankruptcy stay to proceed.
If the bankruptcy trustee is going to liquidate the debtor’s property you will receive notice. The notice will indicate that if the debtor owes you money you need to file a proof of claim with the bankruptcy court. It is important to do that so you will be provided some portion of your claim. If you don’t it does not mean the child support will be wiped away. It simply means your opportunity to get a portion paid through the bankruptcy will be lost. The child support arrears will not be discharged and the debtor will still owe you.
Debtor files Chapter 13 Bankruptcy and is behind on child support
Action is needed if a debtor behind on child support files a Chapter 13 bankruptcy. You will file a proof of claim with the bankruptcy court indicating the amount the debtor owes. You will also receive a copy of the debtor’s repayment plan. Reviewing that plan is necessary to determine whether the plan accurately provides for repayment of child support. You should consider hiring an attorney to help manage domestic support obligations in a chapter 13 bankruptcy case.
Conclusion
If you are behind on your child support obligation and need help reorganizing your debt consider contacting a bankruptcy attorney to review your situation. It is often the case you can deal with your debt more easily through bankruptcy than outside of it.
If you are owed child support consider contact Caldwell Law to help you analyze the situation and determine the best steps to get paid for your child’s support.