By Bonnie A. Rabinovitch-Mantel, CFLS.
For most individuals, declaring bankruptcy is way to ward off creditors and debt collectors until your finances are in order—providing protection against garnished wages, repossession, foreclosure, and the like. But what happens when bankruptcy and child support payments meet in the crosshairs?
While declaring bankruptcy can “discharge” certain debts—like those from credit card companies, or debt stemming from medical bills—there are other types of debt which cannot be discharged. Student loans, DUI related bills, and child/spousal support payments are all examples of debt that cannot be discharged by declaring bankruptcy. In fact, the courts specifically ensure that child support cannot be discharged when filing for bankruptcy, so as not to encourage individuals from taking advantage of any potential loopholes in the system. However, there are certain hurdles you may need to overcome, should your child’s other parent declare bankruptcy.
In San Diego County and throughout California, the parent of a child under the age of 18 (sometimes 19, if the child is still enrolled in high school full-time) must pay the custodial parent (the parent who holds primary custody) in order to assist with child-related costs including food, shelter, and other day-to-day expenses. Should the parent who pays child support file for bankruptcy, he or she is shielded from creditors that might attempt to sue for the debt owed to them. Yet when it comes to child support in San Diego, this mandated payment is seen as prioritized debt, and must ultimately be paid even if the indebted parent has filed for bankruptcy.
Chapter 7 Bankruptcy and Child Support in San Diego
Southern Californians who file for Chapter 7 bankruptcy generally have their non-exempt assets liquidated in order to repay their creditors. Child and spousal support payments, however, are prioritized and are repaid first, before any other form of debt—even debt associated with taxes.
That means that if you are owed child or spousal support by your ex, who has declared bankruptcy in San Diego, you are most certainly entitled to those back payments. Whatever financial gains come from the liquidation of your ex’s assets first go towards paying off whatever child and spousal support is owed to you.
Chapter 13 Bankruptcy and Child Support in San Diego
After filing for Chapter 13 bankruptcy in San Diego, your ex will develop a payment plan with his or her creditors, as well as with the court. Typically, these payment plans extend three to five years, while still prioritizing back and current child and spousal support payments.
Even under Chapter 13 bankruptcy in San Diego, child and spousal support debt will not be discharged, and in order for any other form of debt to be discharged, your ex will have to show proof that he or she is current on their child support payments.
Though a former spouse filing for bankruptcy may seem like a hindrance when it comes to receiving child and spousal support in San Diego that you are owed, it does have the potential to be a positive development. By filing for bankruptcy, your ex may have his or her major debts—from credit cards, medical bill, etc.—discharged, and because child and spousal support is prioritized, discharging your ex’s other debts might free up his or her future earnings that will then go towards child and spousal support.