Bankruptcy and Child Support/Alimony: Dischargeability, Priority Claims, and Means Test Treatment
Bankruptcy provides individuals with a fresh start by eliminating or reorganizing their debts. However, it's important to understand the treatment of child support and alimony obligations in bankruptcy proceedings. This article aims to clarify whether these debts can be discharged, their treatment as priority claims in Chapter 13 bankruptcy, and how they are considered as income on the means test in Chapter 7 and Chapter 13 bankruptcy.
1. Dischargeability of Child Support and Alimony Debts:
Child support and alimony obligations cannot be discharged through bankruptcy. These debts are considered priority debts and are excluded from discharge to ensure the continued financial support of dependents. Debtors remain responsible for fulfilling these obligations even after the bankruptcy process concludes.
2. Treatment of Child Support and Alimony in Chapter 13 Bankruptcy:
Chapter 13 bankruptcy allows debtors to reorganize their debts and make regular payments to creditors over a specified period. Child support and alimony obligations receive special treatment in Chapter 13 bankruptcy.
a. Priority Claims: Child support and alimony debts are classified as priority claims, which means they are given top priority for repayment under the bankruptcy plan. These obligations are not subject to the same reduction or modification that other unsecured debts may undergo.
b. Repayment Requirements: Debtors are required to include ongoing child support and alimony payments in their proposed Chapter 13 repayment plan. This ensures that these obligations continue to be met during the bankruptcy process and beyond.
c. Arrearages: If the debtor has fallen behind on child support or alimony payments and accrued arrearages, the Chapter 13 plan should include provisions for repaying those arrearages over the duration of the plan. This helps debtors catch up on missed payments while staying current on ongoing obligations.
3. Treatment of Child Support and Alimony as Income on the Means Test: The means test is a key component of both Chapter 7 and Chapter 13 bankruptcy. It helps determine eligibility and the repayment amount in Chapter 13 bankruptcy. Child support and alimony payments are treated differently on the means test:
a. Chapter 7 Means Test: Child support and alimony payments received are excluded from the calculation of income on the means test in Chapter 7 bankruptcy. They are not considered part of the debtor's income.
b. Chapter 13 Means Test: Child support and alimony payments received are included in the calculation of income on the means test in Chapter 13 bankruptcy. They are considered part of the debtor's income and may affect the repayment amount.
4. Seek Legal Advice: Navigating the complexities of bankruptcy, especially concerning child support, alimony, and the means test, requires professional guidance. It is crucial to consult with a knowledgeable bankruptcy attorney who can assess your specific circumstances, explain the applicable laws in your jurisdiction, and guide you through the process while ensuring compliance with all legal requirements.
Conclusion:
Child support and alimony obligations are not dischargeable in bankruptcy, ensuring the continued financial support of dependents. In Chapter 13 bankruptcy, these obligations are classified as priority claims and must be included in the proposed repayment plan. Child support and alimony payments received are treated differently on the means test, with Chapter 7 excluding them from income calculations and Chapter 13 including them. Seeking legal advice from an experienced attorney is essential to understand the specific treatment of these obligations and navigate the complexities of bankruptcy while ensuring compliance with all legal requirements in your jurisdiction.