Child Support and Bankruptcy – The Exceptions to Discharge of Debts.
Bankruptcy is the process where a person or business declares its incapacity to pay back creditors. Bankruptcy is a legal process. When the debtor (person or entity that owes) is unable to pay outstanding debts, it may file for bankruptcy. The judge determines, based on the type of bankruptcy filed whether all debts will be discharged; other times, a judge puts the debtor on a payment schedule.
Some people see bankruptcy as a fresh start. Although it does provide some form of relief, not all debts can be eliminated.
Child support arrears and other debts owed for family support are two of debts that follow the debtor indefinitely. You can say a debtor is ‘married’ to the debt until it is paid off; that is, until death do them part. No pun intended. Also, in some instances, after death, the debt must be paid by the debtor’s estate.
There is usually an exception to every rule.
How to Get Rid of Back Child Support (Debts)
Generally, child support cannot be discharged in bankruptcy – except in two circumstances:
When the child support in a divorce decree specifies that an obligation to a spouse is child support; if the obligation is not actually in the nature of child support, then the obligation can be discharged in bankruptcy. For example, if the divorce decree states that John must pay Jane (ex-Wife) $1,800/month in mortgage and it will be treated as child support. That payment amount might be discharged in bankruptcy.
If the child support payment obligation is assigned to a third-party, the debtor may be able to discharge it in bankruptcy. For example, if a grand parent or employer takes over the obligation of paying child support.
These exceptions fall into the allowances allowed under law. The United States Bankruptcy Code. 11 U.S.C. 523 provides that:
(a) A discharge under Section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt . . .
(5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that
(A) such debt is assigned to another entity, voluntarily, by operation of law, or otherwise (other than debts assigned pursuant to § 402(a)(26) of the Social Security Act, or any such debt which has been assigned to the Federal Government or to a State or any political subdivision of such State); or
(B) such debt includes a liability designation as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support . . . .