Answer: Congress recognizes that child support serves a vital interest: It maintains the bonds between parent and child, enforces parental obligations, and keeps many children out of poverty. For these reasons, child support is an exception to many of the rules that otherwise apply in bankruptcy cases.
Unlike most other types of debts, for example, child support debt cannot be discharged in bankruptcy. A parent will continue to be legally responsible for child support before, during, and after filing for bankruptcy. Also, the automatic stay does nothing to stop child support collection actions. Although most creditor activities must stop when a debtor files for bankruptcy, this is not true of actions to collect child support, such as a wage garnishment.
If you are the parent receiving child support and you plan to file for bankruptcy, keep these rules in mind:
- You must include the amount you receive as child support in your income when you complete your bankruptcy paperwork and take the means test. (Among other things, the means test determines whether you may use Chapter 7).
- Amounts necessary to support your children are allowed expenses in bankruptcy. This means you may subtract them from your income when determining your disposable income. Your disposable income is used to determine whether you pass the means test. It also determines how much you will have to pay into your repayment plan, if you file under Chapter 13.
- The laws of most states (and federal law) exempt child support payments. This means that, if you file under Chapter 7, the trustee can't take your child support to repay your creditors.
To learn more about bankruptcy and child support, see How is income from child support treated in Chapter 7 bankruptcy?