Will a Chapter 13 Bankruptcy Reduce My Child Support Payments?

Several decades ago, it was possible to have at least some of your child support arrears discharged by filing for bankruptcy in New Jersey. In the 80’s, Congress made changes to some bankruptcy laws because not all debts are created equal. Since then, child support debt can no longer be discharged via bankruptcy of any chapter.

Priority vs Non-priority Debts

Whether you are filing for chapter 7 or chapter 13 bankruptcy, New Jersey bankruptcy laws categorize all of your debts into two main lists: Priority Debts and Non-priority Debts.

Those debts that fall into the Priority category include:

  • Child support
  • Alimony
  • Money that you owe due to a court order
  • Money owed to the government

Priority debts are deemed such because of their great impact on others, and they are considered nondischargeable. In addition, child support is given precedence over all other types of priority debts due to the fact that the welfare and well-being of the debtor’s children are dependent on it.

Will the Automatic Stay Allow a Pause in Child Support Payments?

The normal course of action during a NJ bankruptcy case is that as soon as the case is filed, something called an ‘automatic stay’ immediately prevents any creditors from collecting money from the debtor. The stay is a legal injunction that was put into place to protect debtors from falling further into debt.

Relating to child support, the automatic stay has no power. In both chapter 7 and chapter 13 bankruptcies, the debtor is required to continue paying child support in full and on time throughout the entirety of their bankruptcy case. Failure to do so will actually risk a complete lift of the automatic stay, giving creditors permission to attempt collections again, potentially resulting in a huge mess.

If child support payments are a significant problem for you, filing for a chapter 13 bankruptcy in New Jersey is definitely a wise choice. While you must continue making child support payments (including any arrears), doing so will make your overall debt picture look much more promising.

How Will Paying Child Support Ease my Debt Load?

You may be asking yourself how you’ll be better off financially due to the high priority of making all of your child support payments. The courts look fondly upon debtors who take responsibility for and recognize the significance of their child support obligations. Therefore, as long as you are paying your child support on time, your other debts will be reduced in order to help you continue to pay that support.

This is great news for debtors with child support responsibilities because the amount of money you owe in credit card debt, medical bills and personal debts will be reduced. Chapter 13 bankruptcy will also help you reorganize all remaining debts so that you can afford your monthly payments.

Most debtors would naturally much rather support their children than pay off extraordinary medical bills or credit card debt. Filing for chapter 13 will help you do the right thing while reorganizing your payments, ensuring that you can do so without drowning in debt.

Image credit: Stewart Black

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