Behind on your child support? Here's how bankruptcy might help your finances
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Child support and alimony are court-ordered obligations and are serious matters. If you don’t pay what the court has ordered, in North Carolina, you can lose your drivers’ license, professional license, passport, get hit with negative items on your credit, and face arrest. If you can’t afford your child support or alimony payments, you might wonder if North Carolina bankruptcy can help you. The quick answer is that bankruptcy can help you make room in your budget for payments, but it can’t directly lower or terminate these payments.
Who Can Change Child Support and Alimony Payments?
Only the family courts, not the bankruptcy court, can modify your child support or alimony obligation. If you can’t afford your payments, going back to the court to discuss your financial constraints as soon as you realize you can’t pay is the best first step. Only a family court judge can change the amount you’re assigned to pay under a court order. If you simply don’t pay, the state of North Carolina’s Child Support Enforcement Division (CSE) has many tools to try and force you to pay up including:
- Withholding money from your paycheck
- Put a lien on your real estate or other assets
- Seize your federal or state tax returns
- Withhold funds from your unemployment payment
- Seize workers compensation benefits
- Suspend your drivers, occupational, sport and recreational license
- Report the delinquency to the credit bureaus
- Revoke your passport or reject a passport application
- File court charges against you
- Issue a warrant for your arrest
As you can see, for all these reasons, paying your alimony and child support obligations is something to take seriously not only because the court ordered you to but also because the lack of compliance can wreck your finances.
How Can Bankruptcy Help with Support Obligations?
Although bankruptcy can’t directly modify your child or spousal support obligations, what it can do is to help you shed other debt so that you’re better able to pay what the court has ordered. Also, if you discharge other debts and still can’t afford the payments, the family court will see that you’re taking things seriously by filing bankruptcy to try and get your finances back on track and that might help your case.
In North Carolina, if you’re eligible to file Chapter 7 bankruptcy, you can discharge credit card debt, medical bills, personal loans written without collateral, delinquent utilities, some older debts and other unsecured debts that fall within certain parameters. In some cases, student loans might be dischargeable, but this is most common for those with a serious medical condition or disability, those that are impoverished, and older consumers. Shedding these debts can make room in your budget for your other obligations.
Chapter 13 bankruptcy can help buy you time to catch up on your obligations if you’ve already fallen delinquent. For instance, if you are six months behind on payments of $500 a month because you were unemployed but now have a job, your Chapter 13 repayment plan would require you to pay the $500 a month plus a portion of the past-due balance each month. This form of bankruptcy is designed to help you catch up on debt, but it will not lessen or discharge any support obligation.
Bankruptcy Helps People Get Their Finances Back on Track
If you’ve fallen behind on child support or alimony payments, it’s likely that you’re delinquent on other debts as well. That’s an uncomfortable place to be because you’re living with the stress of unpaid debt. You might be dealing with debt collectors calling about credit cards or medical bills, and that’s bad. But falling behind on a responsibility like child support is deeply personal and can make you feel guiltier than any other debt you might owe.
For those North Carolina consumers behind on child support or alimony, why not come in for a free bankruptcy consultation to discuss your options and find out of bankruptcy can benefit your financial situation? Contact the Law Offices of John T. Orcutt today for a free North Carolina bankruptcy consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington. Call +1-919-646-2654 today to find out more about the life-changing benefits of bankruptcy.