When filing a Chapter 13 bankruptcy in Florida, it is important to understand how child support payments and any arrears are impacted. Unlike Chapter 7, where an attempt is made to pay off these debts as part of liquidating assets, Chapter 13 requires you to catch up on any past due balances.
The reason for this is a decision by Congress based on public policy to make sure that child support is paid as a top priority to not injure a child’s wellbeing. This decision adds this responsibility to a special list called Priority Debts, which are paid off before other bills. In fact, this debt takes precedence over others on the list, such as taxes.
However, this also means that filing for Chapter 13 bankruptcy in Florida will not discharge your obligations or relieve you of these debts. It is imperative that you continue to make your obligatory payments during the entire Chapter 13 repayment plan.
Catching up on past due payments
A benefit of Chapter 13 bankruptcy in Florida is that it allows you to catch up on overdue child support. In order to ensure the past due balance is paid off, your available funds to pay bills may be disproportionally applied to your child support balance and ongoing payments. This can result in paying less to non-priority debts like medical bills, general debts, and credit cards.
When you file a Chapter 13 bankruptcy in Florida, an automatic stay is issued to all creditors. However, this does not stop efforts to collect child support debt from property that is not considered to be included in your bankruptcy estate. Unlike Chapter 7, while in Chapter 13, your earnings are considered to be included in your bankruptcy estate. This means a creditor cannot work outside of the bankruptcy to collect child support debt. Instead, they must seek permission from the court (through a motion) before they can initiate any action to collect. Most often, this filing affects your earnings after bankruptcy, so paying these obligations while under the repayment plan is significantly beneficial to you. If you are making plan payments on time and curing your pre-bankruptcy child support balance while in Chapter 13 bankruptcy in Florida, you need not worry about a separate action to collect money from you outside of bankruptcy.
Remember, Chapter 13 bankruptcy in Florida only allows you to cure your past due child support balance through your repayment plan. This means you must continue to make your regular payments during your filing. If you fail to pay child support during your Chapter 13, the court can lift the automatic stay and allow creditors to go after your assets regardless of whether or not they are included in the bankruptcy estate.
To receive a discharge on any other debts, you must be current on child support payments
You cannot receive a Chapter 13 discharge on any of your debts until you certify that you are current on all domestic support obligations, including child support at the end of the chapter 13 plan. This means if you miss any child support payments during your filing, you have to pay them off before you can get your discharge.
There can be other complications when filing a Chapter 13 bankruptcy in Florida as it pertains to family law and its impact on and from a filing. Contact me today to have your situation evaluated and see how I can help you determine how to file for best results.