Money is the root of all evil. That’s how the old saying goes. Sometimes fights about money or money problems can be a factor in why couples get a divorce. After a divorce, one or both people may end up having to file for bankruptcy. In dealing with bankruptcy concerns, child support becomes a critical factor for Florida law cases. If you find yourself in this situation with your ex-spouse, it’s good to understand how bankruptcy affects child support payments.
Often, one party files for bankruptcy under the impression that any and all financial obligation to the other party will be dischargeable in the bankruptcy. But, this does not apply to alimony or child support obligations. In response to the economic downturn and housing market decline, a bankruptcy law went into effect in 2005, titled ‘The Bankruptcy Abuse Prevention and Consumer Protection Act’ (BAPCPA). This altered the relationship of debtors and creditors, and altered the relationships between creditors. The law changed things in the bankruptcy code including how a domestic support obligation will be handled.
A domestic support obligation can be:
- Alimony and/or child support
- Money owed to a spouse before divorce
- Financial obligation incurred during a divorce agreement
Prior to The Bankruptcy Abuse Prevention and Consumer Protection Act, the law indicated that you could not release a child support obligation or alimony in a Chapter 7 or Chapter 13 bankruptcy, but you could discharge any money owed to a spouse under a divorce agreement as long as the money wasn’t a part of the alimony or child support obligation. Also, before this new law, if the ex-spouse filing for bankruptcy couldn’t pay the debt or if discharging the debt would be less damaging to the spouse receiving the funds, it could be listed and discharged depending on the final judgment of the court. All of this changed with the new law.
A Chapter 7 bankruptcy is a personal bankruptcy, offering filers a complete discharge of all eligible unsecured debts; however, child support is not eligible for discharge thanks to The Bankruptcy Abuse Prevention and Consumer Protection Act. It is understood by the United States Congress, family law and bankruptcy courts that child support payments are intended to maintain a human life and are therefore highly prioritized and protected by the court. If you or your ex-spouse file a Chapter 7 or 13 bankruptcy, the domestic support debt and child support is still obligated and the courts will not be able to discharge the debt. When the bankruptcy is over, the spouse will still owe the debt and support to the other spouse.
Bankruptcy eliminates certain low-priority debts, so it may make it easier for your ex-spouse to make monthly child support payments. Bankruptcy can’t change what your ex-spouse owes in child support or modify the amount of payment.
Last Updated on April 18, 2017 by The Orlando Law Group