Unfortunately, bad things can happen to good people. The government created the federal bankruptcy laws for that very reason – to protect people who have lost control of their finances due to unforeseen circumstances. Some of the most common questions we hear from potential clients revolve around child support and alimony – and how a bankruptcy case will affect them.
Child support and alimony are treated differently in a bankruptcy cases because they are not standard debts. If you are thinking about bankruptcy and are wondering how your filing might affect child support or alimony payments, you should call us today at 214-760-7777. Our experienced Dallas bankruptcy attorneys can give you specific answers about your unique financial situation.
How bankruptcy affects child support
One of the core principles of the laws created for bankruptcy is the process of discharging debts. Certain debts cannot be discharged, though – and child support is one of these types of non-dischargeable debts. Whether you are filing for Chapter 7 or Chapter 13, child support payments are excluded from any discharge of debts associated with your case. In simple terms, this means that the legal obligation to make child support payments cannot be erased. Even after the bankruptcy case is completed, all past-due and future child support payments must be made.
Another key element of bankruptcy cases is the “automatic stay”. The automatic stay happens as soon as the bankruptcy case is filed, and it means that all collection efforts must be immediately halted. Because child support is a non-dischargeable debt, the automatic stay does not apply – the child support order cannot be modified and collection of payments will still continue.
How bankruptcy affects alimony
In Texas, alimony is called “spousal maintenance”, and in most bankruptcy cases, it is a dischargeable debt. That means that unlike child support, outstanding alimony payments may be eligible for discharge under certain circumstances.
It’s not a simple situation and sometimes exceptions occur. For example, if alimony payments have been designated as non-dischargeable in the divorce decree, those payments are still enforceable after the bankruptcy. Again, a consultation call with our team will be your best option – once our attorneys have heard the details of your specific situation, they can advise you on possible options and outcomes.
Domestic support obligations must be prioritized
The bankruptcy laws have designated that child support and certain alimony payemnts are “domestic support obligations”, or DSOs. In a bankruptcy case, these debts must be prioritized – so they must be paid before other unsecured debts can be addressed.
In a Chapter 13 bankruptcy case, your debs are restructured and you make payments through a repayment plan approved by the court – and DSOs must be paid in full over the timespan of the repayment plan. If you fail to prioritize your DSO payments, you could face the dismissal of your case.
Our team of experienced Dallas bankruptcy attorneys can help!
Personal bankruptcy cases can include intricate elements and challenges – that’s why it is so important to find experienced bankruptcy attorneys who can help you find the best path forward. Call us at 214-760-7777 to schedule your free consultation, where one of our attorneys will listen to the details of your situation and explain your options in clear, simple terms. We truly care about our clients, and we will take the time to explain the process, protect your rights, and represent you throughout your bankruptcy case. Let us help you get a fresh start!