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Does the Automatic Stay During Bankruptcy Apply to Child Support?

September 15th, 2020 at 9:48 am

TX bankrupcy lawyer, Texas bankruptcy attorneyWhen you file for protection under the U.S. Bankruptcy Code, the bankruptcy court will automatically issue a stay that stops all collection activities by creditors. The automatic stay is a court order that prevents creditors from calling you, sending you letters, and otherwise pushing you to pay what you owe them. The stay is meant to be a form of relief that gives you the chance to get organized as you approach your bankruptcy proceedings. If you are subject to a child support order, however, it is important to understand that the automatic stay will not help you with that particular obligation.

How the Automatic Stay Works

Whether you are filing Chapter 7 or Chapter 13 bankruptcy, the bankruptcy code recognizes that you will need time and space to sort out your thoughts and to prepare for the proceedings without creditors bothering you at all hours of the day. The automatic stay is meant to give you that time and space. The stay also serves as the proverbial “line in the sand” as well, meaning that once the stay is issued, collection efforts cannot resume until the bankruptcy proceedings are complete or the creditor obtains the express permission of the bankruptcy court to contact you again. In the meantime, you will not be at risk of foreclosure, eviction, wage garnishments, or even having your utilities shut off.

Child Support Is an Exception

If you currently pay child support, the automatic stay will not help your required payments nor will it prevent collection activities if you are behind on your support obligation. The automatic stay is intended to give you relief, but not at the expense of your child’s best interests. You must continue making your child support payments during the bankruptcy proceedings, or you could be subject to collection efforts by state agencies or the court.

It is also important to note that child support obligations—including obligations for back support—are not eligible to be discharged in Chapter 7 bankruptcy. Regardless of what happens to your other debt, you will still be required to pay your current support amount, as well as any delinquent amounts.

Your child support obligations will not be discharged in 13 bankruptcy either. Child support and other types of “domestic support obligations” are considered high-priority debts, which means they will be at the top of the list of debts to be paid according to your reorganization plan. However, if you keep up with the terms of your plan, the state cannot take action against you during the repayment period, which usually lasts between three and five years.

Speak With a New Braunfels Bankruptcy Attorney

If you have questions about how filing for bankruptcy might be able to help you catch up on your child support obligations, contact an experienced San Antonio bankruptcy lawyer at The Law Offices of Chance M. McGhee today. We will help you find the answers you need as you look to get back your feet financially. Call 210-342-3400 for a free consultation today.

 

Sources:

https://www.thebalance.com/child-support-and-alimony-in-bankruptcy-4154002

https://civil.sog.unc.edu/bankruptcy-and-the-application-of-the-automatic-stay-to-family-law-cases/

What Debts Are Not Dischargeable in a Texas Bankruptcy?

December 13th, 2019 at 9:46 am

TX bankruptcy attorney, TX chapter 7 lawyerFiling for bankruptcy is often the last resort for many people. If you successfully file for bankruptcy and your debts are discharged, it can affect your current and future finances for years, which is why people do not typically get a bankruptcy unless they absolutely have to. For most forms of bankruptcy, receiving a discharge of your debts is typically the end goal. Most debts can be discharged or forgiven in a bankruptcy, but there are certain types of debts that either cannot be discharged or will not be discharged based on certain circumstances.

Student Loans

When it comes to student loan debt, it is almost never automatically discharged in a bankruptcy. If you are looking to have your student loans forgiven, you must prove to the court that making your student loan payments would cause you undue hardship. To do this, you have to prove that making your student loan payments would not allow you to maintain a minimal standard of living, you will likely be in a tight financial situation for the remainder of your student loan repayment period and you have made a decent number of payments in good faith on your loans.

Taxes

For the most part, federal, state and local taxes are not dischargeable in bankruptcy. However, there are certain situations in which you may be able to have your tax debts forgiven if you file for a Chapter 7 bankruptcy. To do this, you must prove that all of the following five criteria are true:

  • The tax return in question was due at least three years ago;
  • The tax return was filed at least two years ago;
  • The IRS assessed your tax at least 240 days prior to the filing of the bankruptcy;
  • Your tax return was not fraudulent; and
  • You are not guilty of tax evasion.

Domestic Support

Domestic support that you owe to a spouse or child will never be discharged in a bankruptcy. If you have a legal obligation to pay spousal support or child support payment, you will still be held to that obligation after a bankruptcy.

Consult With a San Antonio, TX Bankruptcy Discharge Attorney

Getting a bankruptcy, whether that bankruptcy is a Chapter 7 or Chapter 13, can be a fresh start for most because of the ability to have your debts discharged or forgiven. If you have certain specific types of debt, you may not be able to have those discharged in a bankruptcy. At the Law Offices of Chance M. McGhee, we can help you analyze the types of debt that you are in and determine whether or not you would be able to have those debts discharged if you were to file for bankruptcy. Let our Kerrville, TX bankruptcy discharge lawyers help you make the right decisions for your financial future. Call our office today at 210-342-3400 to schedule a free consultation.

 

Sources:

https://www.thebalance.com/what-is-non-dischargeable-in-a-bankruptcy-case-316130

https://www.investopedia.com/terms/n/nondischargeable_debt.asp

https://www.law.cornell.edu/uscode/text/11/523

Catching up on Child or Spousal Support

August 16th, 2017 at 7:00 am

If you’re behind on support payments, filing under Chapter 13 can legally stop your ex-spouse and support enforcement from pursuing you.  


Your filing of a Chapter 13 case can stop your ex-spouse and support enforcement agency from very aggressively pursuing you. It can give you a reasonable time to cure your unpaid support payments. But you have to strictly follow the rules to get this advantage.

Here’s how it works.

The “Automatic Stay” As It Applies to Child and Spousal Support 

Filing either a Chapter 7 or Chapter 13 bankruptcy case stops most creditor collection actions.  This happens through the power of the “automatic stay.”  See Section 362(a) of the U.S. Bankruptcy Code.

But child and spousal support debts are an exception to the automatic stay. The Bankruptcy Code makes clear that the “automatic stay does not apply to “the collection of a domestic support obligation.” Section 362(b)(2)(B).  “Domestic support obligation” includes both child and spousal support. Section 101(A14). And it includes support that becomes owing “before, on, or after the date” of filing the bankruptcy case.

So collection of both past-due support and ongoing support is generally not stopped by a Chapter 7 “straight bankruptcy” filing.

Also, if you file a Chapter 13 “adjustment of debts” case, the collection of ongoing monthly support payments is not stopped. That makes sense since there is usually a divorce court order that requires the payment of those monthly amounts. The federal bankruptcy court respects these divorce court orders. So if you need to terminate or reduce a monthly support payment, that needs to be done through the divorce court which entered that support order.

Chapter 13 and Past-Due Support Collection

However, Chapter 13 does stop the collection of past-due support.

That can be hugely important. That’s because a Chapter 13 case not only stops past-due support collection, but provides a practical way to catch up.

If you are behind on child or spousal support Chapter 13 gives you up to 5 years to catch up. And it can protect you throughout that time in a number of ways. It protects you directly from the collections actions of your ex-spouse or your local support enforcement agency. And it also protects you from all of your other creditors as you deal with all your debts at once through a court-approved payment plan.

Your Chapter 13 payment plan works because it is based on what you can afford to pay. It takes care of everybody in one package so that you don’t worry about not being able to catch up on support because of the demands of other creditors.

Preventing or Stopping Aggressive Support Collection

This power of Chapter 13 is so important because your ex-spouse/support enforcement agency have some extremely aggressive collection tools. If you get behind, your wages and bank accounts can be garnished, liens can be placed on your real estate, and your driver’s license can be suspended. In most states any other state-issued licenses can also be suspended. This includes occupational and professional licenses that you may need to pursue your livelihood.

So you are very much at the mercy of your ex-spouse/support enforcement agency if you’re behind on your support obligations.

Must Follow Rules Strictly

So Chapter 13 can get you out of this difficult dilemma by stopping this intense collection of past-due support. But you can only maintain this protection if you follow the rules very strictly.

  • Your Chapter 13 plan must include enough money to pay off the past-due support before the end of the case.
  • You must keep current on your ongoing support (assuming you continue to owe it). This includes being very clear about when the first monthly support payment is due after your Chapter 13 case is filed and paying it on time. Otherwise your ex-spouse/support enforcement can inform the bankruptcy court of your non-payment. It would then very likely get permission to start/resume collection of the back support. That also applies to all subsequent monthly support payments during your Chapter 13 case.
  • You are already obligated to keep current on your monthly Chapter 13 plan payments, but all the more so here. Those plan payments are what’s paying the past-due support (along with whatever other debts you are paying through the plan). So if you fail to make any plan payment on time your ex-spouse/support enforcement can ask the court for permission to resume collection of the back support amount.

Conclusion

Chapter 13 gives you extraordinary power to stop collection of your past-due support. But you need to be really responsible or else you’ll lose that power.

 

Call today for a FREE Consultation

210-342-3400

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