If you’re behind on child support or spousal support, the support enforcement agency can be extremely aggressive. Chapter 7 doesn’t help much. Chapter 13 CAN.
In most states an ex-spouse—or the state’s support enforcement agency acting on his or her behalf—has extraordinary ways to collect on current and back spousal or child support obligations. These include not just ways of getting directly at your money, but also ways to hurt you with the intent of forcing you to pay.
So we’re not just talking about garnishing your wages and bank accounts, taking away income tax refunds, or putting liens on your real estate. We’re talking coercive action. Your driver’s license can be suspended. This includes your commercial driver’s license, so that you can’t work if you’re a truck driver or have any other job requiring that license. Your professional or occupational license could also be suspended. It might prevent you from legally working in your profession or business as a nurse, doctor, realtor, insurance agent, mortgage broker, lawyer, or even in some places athletic trainer or funeral director!
There’s more. Your hunting, fishing, boating and other recreational licenses could be revoked. You can even be denied a U.S. passport.
Chapter 7 Gives Very Limited Help
“Straight bankruptcy” under Chapter 7 unfortunately does not stop any of these collection methods. The “automatic stay” that stops just about all other collection efforts has an exception for spousal support and child support. (See Section 362(b)(2)(B) of the Bankruptcy Code.) The only way that Chapter 7 can help is that it can often legally write off (“discharge”) all or most of your other debt. You would then have the money to pay your support. But that does not help deal with your financial emergency if you’re in the support enforcement’s crosshairs.
Chapter 13 CAN Help Where it Counts the Most
The filing of a Chapter 13—the three-to-five-year “adjustment of debts” kind of bankruptcy—DOES stop all these aggressive ways of collecting on support obligations. The “automatic stay” does apply in most respects to Chapter 13, as long as it affects the collection of your assets that did not exist at the time your case is filed, such as future income. But to make this protection last more than just a few days or weeks, you must rigorously meet a number of conditions:
- Your Chapter 13 plan must show that you are going to catch up on all the back spousal or child support during the life of the plan. And then you must make your monthly plan payments on time. Show that your plan is feasible and that the back support will in fact be paid in full.
- Your budget must show that you will be able to start (or continue) making the regular monthly divorce court ordered child support or spousal support payments. Then, you must actually pay those on time. That starts with the first one that is legally due on whichever day it’s due immediately after your Chapter 13 is filed, and then every month thereafter.
- At the end of your Chapter 13 case you must certify that you are current on your ongoing spousal or child support payments, or else you cannot complete your case and get a discharge of your remaining debts.
On the positive side, Chapter 13 neutralizes most of the extremely dangerous firepower of your ex-spouse or the support enforcement agency. It gives you the opportunity to solve an otherwise very difficult problem. Chapter 13 is often a great tool for catching up on your back spousal or child support. You are allowed to favor that debt over just about every other one. You could end up paying very little if anything else to your other creditors, except those other ones that matter to you, such as your mortgage, vehicle loan, taxes and such.
But you must be financially able to meet the above conditions, and then strictly abide by them. If during the Chapter 13 case you miss one of your regular monthly spousal or child support payments, or one of your plan payments, you can expect your ex-spouse or support enforcement to ask the bankruptcy judge for “relief from the automatic stay.” That may grant permission to resume or even intensify their earlier collection efforts. At that point the judges will tend not to be very sympathetic to you, since you are not complying with the conditions that you had agreed to at the beginning of your case.
So Chapter 13 is a rare and often good opportunity to solve the problem of the hyper-aggressive support creditor, but treat it as a one last opportunity that has to be executed well to make it work.