How does bankruptcy impact child support payments?

On Behalf of | Apr 9, 2020 | Bankruptcy |

Child support payments due to custodial parents in 2013 totaled nearly $33 billion. With nearly 70% of those payments reaching their intended recipients, this large sum of money accounts for a significant portion of childcare costs in America.

Close to 50% of American families depend on or are due child support payments. Among custodial mothers, nearly half also rely on one form of public assistance to stay afloat. Losing child support payments would be financially challenging for many American families. For custodial parents living below the poverty line, many for whom child support accounts for 70% of their income, losing this money would be disastrous. So, if a non-custodial parent were to declare bankruptcy, how would that affect child support payments?

The Bankruptcy Code

The 2005 revision to the Bankruptcy Code changed the way bankruptcy and child support interacted. Previously, when an individual declared bankruptcy, a repayment plan assigned priority to each entity owed money, based on certain criteria. The criteria did not place families very high on the priority list. These rules changed with the 2005 revisions under President George W. Bush. Now, when establishing repayment priorities for creditors, alimony and child support payments top the list.

There is still a slight risk. If a non-custodial parent files for Chapter 7 bankruptcy, child support payment will remain the same. However, with Chapter 13 bankruptcy, there may be a slight pause in payments. Chapter 13’s restitution efforts focus on repayment plans — though child support takes priority in these plans, it may take time to set up. Once finalized though, a payment plan will account for all overdue payments, even those missed before the filing.

Seek professional legal assistance for help

For families with questions about child support payments, a local lawyer familiar with family law may be able to provide answers. If a non-custodial parent is withholding payment, an attorney can help bring a claim against them and help families secure their due restitution.