With more and more people facing layoffs or downsizing, we are speaking to more and more potential bankruptcy clients who are dealing with past due child support in addition to tax, credit card, medical and other debt. In some cases, the past due child support is five or ten years old and the “creditor” is a State child support enforcement agency. Does bankruptcy offer any relief?
As I noted in the web site article Child Support and Bankruptcy, the answer is generally “no.” Child support debt is a protected class of debt and the Bankruptcy Code will not allow you to discharge a current or past due child support obligation in a Chapter 7 or Chapter 13 case. The only time I ever see bankruptcy impact child support is when a custodial parent or child support enforcement office voluntarily agrees to accept monthly distributions from your Chapter 13 plan. If, however, the custodial parent says “no,” then you will most likely not see your Chapter 13 plan confirmed by the judge.
While you cannot discharge child support in a bankruptcy, your bankruptcy filing may help you persuade a Superior Court judge that your income has changed, thereby warranting a reduction in your child support obligations.
Superior Court judges in Georgia try to focus on the “best interests of the child” when determining a child support payment amount. Judges also use a formula that considers the income of both the custodial and non-custodial parents along with any special needs of the child.
Your bankruptcy filing can be submitted as evidence in a modification hearing to document your current income and, to a certain extent, your income potential. If you are successful in obtaining a Chapter 7 discharge, you can argue to the Superior Court judge that you have eliminated your (discretionary) unsecured debt and that a federal bankruptcy judge has accepted your budget as truthful and credible.
Both Chapter 7 and Chapter 13 limit you to a budget that is comprised of essential expenditures. If you cannot make ends meet on a bankruptcy budget, then you may very well have a good argument that your child support obligation is too high.