Can Bankruptcy Stop Child Support in Pennsylvania?

Can Bankruptcy Stop Child Support in Pennsylvania?

Bankruptcy and divorce can often go hand in hand, especially when the breakdown of a marriage was spurred by financial issues. When a divorcée files for bankruptcy, questions often arise as to how this filing will affect financial obligations such as alimony and child support. It is important for individuals who have recently filed for bankruptcy to take the necessary steps to gain financial stability while not being held in contempt of a court order. If you have recently filed for bankruptcy but still have an obligation to pay child support, our Philadelphia bankruptcy attorneys can help you explore what your options are going forward.

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How Does Chapter 7 Bankruptcy Affect Child Support?

If an individual files for Chapter 7 bankruptcy, or “liquidation,” that person (called the “debtor”) is able to get rid of most debts and start fresh. For example, debtors in this type of bankruptcy experience an “automatic stay” that temporarily halts debt collection activity. However, child support actions are not part of this stay.

Put simply, the Chapter 7 process allows for the debtor’s assets to be sold, with exceptions. A bankruptcy trustee is appointed, and he or she:

  • Sells the debtor’s assets.
  • Collects all property that is not exempt.
  • Distributes the proceeds from that sale to creditors.

In many cases, a debtor’s personal property – such as cars, equity in real estate, bank accounts, and retirement accounts – are exempt from this process. Liquidation helps to pay off creditors, and the debtor is ultimately free from part of his or her debt.

All unsecured debts, such as medical bills, credit cards, personal loans and utility bills, may be wiped out (“discharged”). However, there are certain debts that are unable to be discharged in a Chapter 7 bankruptcy, called “non-dischargeable debts.” Child support obligations are non-dischargeable in Chapter 7 cases.

While Chapter 7 bankruptcy allows for many people to wipe their slate clean and start fresh, parents with child support payments are not off the hook. Certain debts are considered “priority debts” in this type of bankruptcy. Some of these include alimony, most student loans, court-ordered fines, and, as stated, child support. Thus, even though most debts might be discharged, the responsibility to pay child support is ongoing, and the debtor is subject to a lawsuit to collect these funds if payments are missed. The Philadelphia Chapter 7 lawyers of Sadek and Cooper can guide you in this process if you are considering liquidation.

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Chapter 13 Bankruptcy and Child Support Obligations

After an individual files for Chapter 13 bankruptcy, the debtor is then placed on a court-approved repayment plan to satisfy their debts. This allows a debtor to keep all of their property while repaying creditors monthly by way of future earnings and income.

The repayment plan typically lasts three to five years, and, if the terms of the plan are followed, the debtor’s dischargeable debts will be paid off at the end of the plan. Filing for a Chapter 13 bankruptcy can help pay back taxes, prevent home foreclosure, keep valuable non-exempt property, make up missed car payments, and stop interest from accruing on a debtor’s federal or Pennsylvania tax debt. To file for this type of bankruptcy, a debtor must have a regular source of income as well as some disposable income. Our Philadelphia Chapter 13 bankruptcy attorneys can help you file properly.

Past-due child support arrears may be included in a Chapter 13 bankruptcy repayment plan. Similar to Chapter 7 bankruptcy, child support in a Chapter 13 bankruptcy is considered a priority debt. Thus, it must be paid off over the life of the plan. An individual must show that he or she is current on child support obligations and that past arrears have been paid off in order for the court to discharge any debts.

Filing for Chapter 13 bankruptcy is often the ideal choice for debtors who have child support obligations to fulfill. In a Chapter 7 bankruptcy, the automatic stay does not protect child support debt from being collected from property that is not part of the bankruptcy estate. On the other hand, in a Chapter 13 bankruptcy, a debtor’s earnings are considered part of the bankruptcy estate. Therefore, a creditor who wishes to collect child support from a debtor’s post-bankruptcy earnings must obtain court permission by filing a motion for relief of stay.

As a public policy matter, child support is considered a priority debt because it is the government’s viewpoint that providing for children and their daily living expenses takes precedence over money borrowed from creditors. In short, it is important that individuals who plan to file for bankruptcy understand which types of bankruptcy in Pennsylvania will be most effective in paying off their debts to creditors while also fulfilling family obligations.

Philadelphia Bankruptcy Lawyers Can Help with Debt Relief

To learn more about your best options for filing for bankruptcy, paying arrears, and staying current on child support, call Sadek and Cooper Law Offices, LLC at (215)-545-0008 for a free consultation with one of our experienced bankruptcy attorneys. Our Pennsylvania bankruptcy law firm has handled thousands of cases, and we understand the nuances that accompany cases where bankruptcy and divorce are intertwined.

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Thomas Wright
Thomas Wright
15:09 24 Apr 18
Sadek and Cooper Law did a great job on my bankruptcy case. I really appreciate their assistant. Thank you
Kelly McKenna
Kelly McKenna
11:57 19 Apr 18
This form - specifically Yoninah Orenstein and Patrick Cooper are PHENOMENAL. They were great to work with, very fair with legal fees, and successful in getting an excellent settlement for my divorce (short term marriage
Dessiana Cruz
Dessiana Cruz
13:11 04 Apr 18
I was nervous about bankruptcy, but from the moment I stepped in your office I felt at ease. This process was so easy with your help, that yesterday I was talking to my coworkers about it and recommending your firm to them. You make something that’s scary seem easy and I thank you so much for helping me!
Valerie Nesbitt
Valerie Nesbitt
14:51 03 Apr 18
Sadek and Cooper have been excellent. Everyone has been extremely helpful and patient. The lawyers I have worked with, Matt and Brad, are extremely knowledgeable. I felt very comfortable with them handling my case.
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16:08 02 Apr 18
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13:19 14 Mar 18
Everything has been great. Really awesome job with my case... You and your staff have done a perfect job in my opinion.
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17:02 09 Mar 18
Mr. Sadek was the best and most thorough lawyer I’ve ever met. He’s very human and caring about our case. His whole staff is great too. Highly recommend...
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14:56 01 Mar 18
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14:14 28 Feb 18
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Lavern Baker
17:03 23 Feb 18
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peter b
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19:42 21 Feb 18
Thank you, Sadek and Cooper Law offices for your dedication on my behalf. I appreciate Matthew and Patrick and your staff and all that everyone did to support me in this legal matter. You took an embarrassing, sad experience, for me, and turned it into a successful solution without all the emotional pain expected. After dealing with a loan modification company for over eighteen months without going to an attorney first that is the biggest mistake anyone can make. The Modification Companies set out to sell you lies, broken promises and dilute the homeowner's assets with no knowledge of any kind of law. I can't stress enough stay away from Modification companies, as a Military Veteran and family man, protect you or your family best interest. Go directly to Sadek and Copper you will not regret it! This firm moves with Super speed and diligence protecting you and your family's the entire process, even after watching some of these other attorneys in the courtroom appearing to mishandled their clients’ cases before the Trustee. You made it easy and I’m finally getting my financial life back on track! Thank you for your prompt replies to me, your clear information and preparation needed when at the courthouse. I would of course recommend you to others and I am glad you were the one who had my case. Kind genuine law firm who treats you like family. God bless you all and I pray for your continued success in your field of expertise. This firm is Super Lawyers for a reason. They are the best at what they do! Pete
Doug Tinlin
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06:55 15 Feb 18
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16:07 31 Jan 18
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20:14 09 Jan 18
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15:30 09 Jan 18
Sadek and Cooper law office was a wonderful experience to work with. Bankruptcy is a difficult experience but they helped with the stress so much and made it easy. I would recommend Sadek and copper too anyone.
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19:09 28 Dec 17
Working with both Brad & Matthew was a pleasure. Both gentlemen are extremely knowledgeable and helpful in providing me the right assistance needed to make the correct decision to benefit me in the long run. I would recommend both candidates to anyone looking for assistance with a reputable law firm.
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21:17 21 Dec 17
Highly Recommended. Matt & Brad assisted with my case. I felt comfortable throughout the entire process. Matt was very understanding, patient, and ensured he answered all my questions! Both great guys and very friendly! It was a pleasure working with Matt and Brad.
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