Child support and alimony during bankruptcy
Image by Joanna Malinowska
Wilmington bankruptcy is a powerful tool that can be used to combat most debts. Once you file, the automatic stay kicks into effect, ensuring you get a breather from your obligations. Once you complete your case all the way to bankruptcy discharge, the relief from most debts is permanent. However, it doesn’t work that way with all bills.
There are some categories of debt that bankruptcy affects differently. Chief among these are child support and alimony payments. These are court-ordered payments established by the family court. These are not orders the bankruptcy court will overturn – or even consider overturning – except for including them in a repayment plan. Here’s a look at bankruptcy, alimony, and child support.
Will child support and alimony payments continue during bankruptcy?
The first thing to know is that filing Wilmington bankruptcy does not give you a breather from child support or alimony obligations. If you receive child support, you’re entitled to go on receiving it even during a bankruptcy case filed by the person paying you.
Regardless of bankruptcy proceedings, the obligation to pay child support and alimony continue. It cannot be paused or discharged by the bankruptcy case and any pause in the payments could be regarded as contempt of court.
Contempt can trigger unsavory consequences like wage garnishment or an arrest warrant. Skipping child support and alimony payments is never a good idea. Few creditors in North Carolina can legally garnish your wages, but child support obligations are a notable exception.
What about support obligation arrears?
When you miss child support or alimony payments, you go into arrears. It is much worse than running late on a credit card bill or mortgage payments. Plus, filing bankruptcy can’t diminish the arrears like it can on other unsecured debts.
The arrears cannot be discharged in bankruptcy either. The reason the bankruptcy court won’t help you is that the payments are court-ordered and necessary for the well-being of a child and a divorced spouse (or other support recipient).
What if payment is impossible?
Even if you find yourself in a financial position where you simply cannot fulfill your child support and alimony obligations, the Wilmington bankruptcy process isn’t the solution to reduce it. The only way to have your support obligations modified is to go back to family court.
Until (and unless) the court modifies the payments you owe, you still owe it, and if you don’t pay, the consequence can be dire. Even if the court lowers your future monthly payments, it won’t retroactively reduce the past-due amounts. The arrears will stick.
Appeal to the appropriate court
The best thing to do is pursue a modification of the child support order to align with your current financial realities. Since you cannot pay what you don’t have, the court might lower your obligation based on your income. However, the might not.
However, in the interim, you must continue making payments as previously ordered. You cannot pay less than initially ordered until a new court order issues. But Wilmington bankruptcy might still help depending on what caused your financial shortfall.
Use Wilmington bankruptcy to help
If you use Wilmington bankruptcy to shed other debt such as credit cards, medical bills, etc., it might help make room in your budget to better afford your child support and alimony obligations. The best approach is to consult a reputable North Carolina bankruptcy attorney for advice.
Make an appointment for a free initial consultation and bring in all your income, debt, and child support payment information. Explain your circumstances to the bankruptcy attorney and see what they say about your debt dilemma and your best step forward.
To find out more, read reviews from our clients, then call 1-888-234-4181. Contact the Law Offices of John T. Orcutt for a free Wilmington bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.