When parents fall behind on their child support obligations it can lead to inconvenient enforcement efforts, including bench warrants and driver’s license suspensions. But can parents avoid paying their child support by filing for bankruptcy? Here is how Texas treats bankruptcy and child support.
When you become unable to keep up with your child support payments, the debt it creates can quickly add up to thousands of dollars. While there are ways for Texas parents to modify their child support payments if they lose their jobs or become disabled, many parents already owe a substantial amount in child support arrears by the time that modification occurs.
That raises the question: is child support debt dischargeable in bankruptcy? The short answer is no. Parents in Texas and elsewhere have a legal duty to support their children. That doesn’t go away when you file for bankruptcy. Nor will the automatic stay in a bankruptcy case stop the Texas Attorney General’s efforts to collect past-due child support.
Because child support is non-dischargeable in bankruptcy, if most of your debts come from unpaid arrearages, a Chapter 7 bankruptcy may not be the best choice for you. Whatever your child support balance is when you file for bankruptcy, it will be the same (or higher if you still have minor children) after your petition is discharged.
A Chapter 13 bankruptcy won’t discharge any of your child support obligations either. However, you can include monthly payments toward your outstanding child support arrearage in your Chapter 13 bankruptcy payment plan. In fact, the U.S. Bankruptcy Code treats domestic support obligations (including child support and spousal maintenance) as high-priority unsecured debt. When you create a payment plan with your bankruptcy attorney including child support arrearages, that debt gets paid off first. While your child-related debt won’t be discharged at the end of the 3 to 5 year payment period, the amount of your income allocated to lower priority debts will be lower, and their balances can be discharged when the payment plan ends.
Children’s managing conservators (custodial parents) sometimes need to file for bankruptcy too, especially if their co-parent isn’t keeping up on their child support payments. If you are a single parent receiving child support, you may worry what will happen to that child support income if you file for bankruptcy.
The federal Bankruptcy Code exemptions allow you to shield assets including child support that are actually needed to pay for your children’s daily expenses. Child support and spousal maintenance payments are also exempt as part of the Texas’s personal property exemption up to a combined overall limit of $50,000 per single adult or $100,000 per family. Anything beyond that limit may be liquidated to satisfy your debts under a Chapter 7 Bankruptcy.
To qualify for a Chapter 13 payment plan, you must demonstrate you have enough monthly income to make payments on your outstanding debts. For many conservators, child support payments are a substantial portion of their income. You can use a child support order to prove to the bankruptcy court that you qualify for a Chapter 13 bankruptcy and protect your family’s house and assets for your children’s future.
I’m Attorney Patrick T. Williams and I have been helping Houston-area parents understand the interaction between bankruptcy and child support for over 20 years. I can help you weigh your options between a Chapter 7 or Chapter 13 bankruptcy, and understand how each will affect your Texas child support payments or debts. Please call me or fill out an online consultation form to get started.