Is someone who relies upon support payments from his or her ex-spouse (either for themselves or for any children they may have) affected when their former spouse or partner files for bankruptcy?
When someone files for bankruptcy relief under Chapter 7 or Chapter 13, that person’s creditors must immediately stop all collection efforts on their debt claims. This is known as an “automatic stay”—meaning, creditors are prohibited from actively pursuing the collection of an outstanding debt. Wage garnishments, foreclosures, and nagging phone calls from creditors all must stop.
But does the same principle apply when the issue relates to spousal or child support obligations?
The general answer is no—the automatic stay rule does not apply to domestic support obligations. In other words, regardless of the amounts involved or the reasons why a person decides to file for bankruptcy, alimony/spousal support and child support payments are considered priority debts and are therefore, in the eyes of the court, “non-dischargeable” and exceptions to the automatic stay. The collection of these debts cannot be stopped by a bankruptcy filing, nor are the support obligations, both current and arrears, eliminated after a
debtor completes his or her bankruptcy case.
In a Chapter 7 bankruptcy, ongoing support obligations must be paid during the pendency of the case. As for past payments due (arrearages), they will not only still be due and owing, but also they continue to accrue interest, even during a bankruptcy case, until paid in full.
With a Chapter 13 bankruptcy, things are a bit more complicated. Support obligations—both current and those in arrears—must be paid within the timeframe of the Chapter 13 plan, which is up to five years. But under Chapter 13, you’re permitted to reorganize your debts in order to more effectively catch up with missed past payments (while of course meeting your current support obligations), which may lead to discharging at least a part of your non-support debt. The challenge here is that if you enter Chapter 13 with significant back-support payments due, you will likely face high monthly payments due to a limit on the duration of a Chapter 13 plan to five years (60 months).
A related question I’m often asked: Can I (the debtor) avoid a request for an increase in support by filing for bankruptcy? Again, the general answer is no. In California, the automatic stay imposed by bankruptcy does not preclude a Family Court from determining new support obligations or modifying existing ones.
Bankruptcy is not a way to get out of meeting spousal and/or child support obligations. In any bankruptcy, the ex-spouse or child receiving support will always get priority status.
That’s why it’s in the best interest of all parties to make arrangements before bankruptcy sets in so that support obligations continue to be met in a reasonable and reliable manner. Contact a family law attorney for advice on the best way to proceed in this situation.
Are you in need of legal counseling or have any questions about the above topic? The Law Offices of Ian S. Topf offer free consultation in a variety of issues, ranging from family law/divorce, bankruptcy, and estate planning to criminal/DUI matters and landlord/tenant disputes.
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