Divorce and Bankruptcy

Bankruptcy and Child Support Payments

Unfortunately for single parents, child support payments received in the six month period prior to filing bankruptcy will be counted as income for the purposes of the means test . If inclusion of that child support puts your income above the median income for the state of Texas, you may be forced to file Chapter 13 bankruptcy instead of Chapter 7 bankruptcy . What this means is that instead of receiving a discharge of your debts in bankruptcy, you may need to repay them over a 3 to 5 year period.

Here’s what you should consider:

 Are You Already Receiving Child Support Payments?

If not, you may want to file bankruptcy before those child support payments begin. If you are already receiving child support payments, speak with your bankruptcy attorney to find out if this will place you above the median income for Texas.

Are You Owed Back Child Support?

If you are considering bankruptcy, you may want to delay seeking payment on child support until after your bankruptcy case is completed. However, if you have a reasonable expectation that this back child support will be paid, you may need to report this fact in your bankruptcy proceeding.  Please speak to your bankruptcy attorney about reporting expected child support payments.

Back Child Support Payments are Often Exempt

Back child support payments are often exempt from creditor seizure in Chapter 7 bankruptcy.  So being able to file Chapter 7 bankruptcy may offer this added benefit.

Your Child Support Income Will Not Used in Payment Calculation

It is important to note that even if you do file Chapter 13 bankruptcy your child support income will not be used in the final payment calculation.

Have Any Questions Related to Child Support and Bankruptcy?

If you have any questions regarding child support and bankruptcy, we can help. Give us a call or fill out our contact form to set up a free consultation. We are always here to help.