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Alimony, child support and bankruptcy

by | Jul 26, 2018 | Alimony, Firm News |

If parents in California are struggling to keep up with child support and alimony payments, they are not permitted to discharge those debts in bankruptcy. The wages of a parent who does not pay child support could be garnished. The parent’s credit could also be damaged, and failure to pay child support could even result in jail time.

It is possible for debts that fall under certain types of post-divorce property settlements to be discharged in bankruptcy. Courts will first scrutinize those settlements to see if they were meant to act as stand-ins for either child or spousal support. Some types of property settlements can be discharged in a Chapter 13 bankruptcy but not a Chapter 7 bankruptcy. For example, if a spouse has agreed to pay a portion of debts that were used for the family but are in the other spouse’s name, that debt may be dischargeable in a Chapter 13 bankruptcy. An agreed-upon cash payment to a spouse, such as for equity in a home, could also be discharged in a Chapter 13 bankruptcy.

Chapter 13 is a repayment plan, so there would still be an obligation to pay off some of these debts in contrast to a Chapter 7. With a Chapter 13 bankruptcy, a parent can also pay off child support debts over the term of the court-approved plan without action from the other parent.

A person who is unable to pay the amount of child support agreed upon because of a job loss or a similar change in circumstances can apply for a modification of the order. Once a court approves the modification, the parent is able to pay less. However, it is important to know that in most cases, a modification will have no effect on any amount in arrears, which will continue to be owed.