In Oklahoma filing bankruptcy on child support is not an option. Bankruptcy is a debt management tool often utilized by individuals and businesses experiencing financial hardship. This usually means you cannot reliably pay your debts. Bankruptcy provides an opportunity to get out from under the weight of overwhelming debt. This is done by eliminating past due unsecured debt by filing chapter 7. In those cases where you don’t qualify for chapter 7 you can still get the debt reorganized in chapter 13. Regardless of which bankruptcy you file it comes down to which on you qualify for.
There are certain categories of debt that are dischargeable through bankruptcy. This means that eligible debts are eliminated after the bankruptcy proceeding is completed or a repayment plan is satisfactorily finished. After this the filer will no longer be held liable for the debt.
However, certain debts or obligations are non-dischargeable in both chapter 7 and 13 bankruptcy. For this kind of debt or obligation the obligation continues even after successfully filing and completing a bankruptcy proceeding.
Child Support In Bankruptcy
Child support is one of the non-dischargeable obligations. Support obligations cannot be discharged under Chapter 7 bankruptcy nor under Chapter 13 bankruptcy. If you’re struggling with debt, you could file for bankruptcy to manage other financial obligations. Those debts that can be forgiven once discharged give you more money to pay child support. But, even if your child is no longer a minor, you can’t use the bankruptcy process to discharge child support debt.
Back Child Support and Bankruptcy
Raising children and paying child support isn’t easy. With this said its not uncommon for parents to fall behind on their support obligation. When this happens the problem becomes two-fold. Now you have to pay both the current amount due going forward and catch up the past due amount. The problem here is that bankruptcy will also not forgive a child support arreage or certain other debts. This even applies to those past due amounts you owe even after the children have aged out and a long since gone from the home. The truth about this kind of debt is that the past due amount even survives you. Meaning that if you die and have an estate to probate the creditor can and probably will make the claim against your estate for past due support.
When you file either a chapter 7 or a chapter 13 each of the debts is given a priority of payment. Priority of a debt is the order in which the debt is paid along with your other debts. The higher the priority of the specific debt means that it gets paid, if at all, before lower priority debts get paid. Child support debts get special priority in bankruptcy before other lower priority debt. If any of your non-exempt assets are sold to repay creditors as part of a Chapter 7 bankruptcy, those proceeds will be applied to pay child support before most other debts get paid. Notably, after your Chapter 7 bankruptcy case is concluded, ongoing child support payment obligations will not stop. While you may no longer owe other dischargeable debt, the obligation to fulfill current and future payment orders will continue after your case is finished.
Filing for a Chapter 13 bankruptcy proceeding involves the creation of a manageable repayment plan for debts over three to five years. The filer must have disposable income to pay off their debts under a Chapter 13 bankruptcy. Some creditors receive payment before others due to a bankruptcy priority system. Support is a priority claim that is entitled to special treatment; as such, it is often classified as a priority debt in bankruptcy proceedings.
Someone filing for Chapter 13 bankruptcy will be obligated to continue making their regular monthly child support payments, plus a portion of their monthly disposable income will go to paying overdue child support payments, as well as to other debts owed.
When a filer has successfully followed their repayment plan (three to five years), the remainder of certain eligible debt balances will be discharged after the proceeding. However, current and future child support obligations will not be discharged after the completion of the repayment plan. The elimination of other debts could help put the filer in a better position to make regular child support payments after the bankruptcy proceeding and repayment plan have finished.
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Benefits Of Filing For Bankruptcy
In terms of child support, the most valuable part of filing for bankruptcy is that the filer will have less overall debt to pay. This means that after discharging eligible debt you have more income to make child support payments. Another added benefit, under Chapter 13, is that while you are actively following the repayment plan, your earnings are considered property of the bankruptcy estate, so your wages cannot be garnished without the bankruptcy court’s permission. Another benefit is that the child support owed lowers the plan payment you have to make. This is because the plan payment amount is determined by the amount of dispossable income you have. Dispossable income is that money left after paying child support, food, rent and other day to day expenses. By lowering your plan payment you are in affect lowering the amount that will go to your other dischargeable debts.
Oklahoma Bankruptcy Lawyer Near You
When you find yourself in financial hardship you have a way out. Although the process of filing seems difficult once you make the decision to file half the battle is behind you. Its about coming to a realization of the circumstance and than acting on the reality. Kania Law Office can assist you with get through the process. We have extensive experience representing, advising, and assisting individuals with Chapter 7 and Chapter 13 bankruptcy cases. When you are behind on child support payments or have other forms of debt, please call us at 918-743-2233 or visit our website. We offer free telephone consultations, and we look forward to hearing from you.