In theory, annual child support payments in the United States are supposed to total more than $33 billion. However, in reality, fewer than half of custodial parents receive full child support payments based upon a court order or informal agreement.
The consequences for not paying child support can be severe. You may have to pay interest on back support. You could have your driver’s license suspended. The court may enter in an order garnishing your wages or have you locked up. The combination of these factors may hamper your ability to secure future employment.
While it’s unlikely that your failure to pay alimony will result in such consequences, it may result in your ex dragging you in and out of court and have other implications. With the stakes as high as they are, you may wonder if bankruptcy could help you alleviate your obligation to make child support and alimony payments.
While you can discharge many debts in bankruptcy, such as medical bills, personal loans and credit card debt, you can’t do the same with domestic support obligations (DSOs) such as child support or alimony. You’ll still need to pay any current obligation plus any amount that’s in the arrears even if you file for bankruptcy and the trustee approves it.
If you’re wondering what’s so unique about DSOs that you can’t discharge them in bankruptcy, they are subject to a court order based on state laws instead of bankruptcy laws. The same logic applies to student loans and why they generally cannot be discharged in bankruptcy either.
You can’t discharge a property settlement agreement via Chapter 7 bankruptcy. You may be able to do so by filing Chapter 13 bankruptcy, though. These bankruptcy codes allow you to discharge cash in lieu of other assets and hold harmless agreements that you may have entered into as part of your property or debt division negotiations in your divorce case.
Bankruptcy might not be ideal for tackling support obligations pursuant to your family law case that you’re struggling with. However, you may be able to seek a modification in your case. Bankruptcy might be an option for you if you want to alleviate yourself of certain property division obligations or other debilitating debts you may have.