If you have fallen behind on family support payments, either from child support or alimony, Chapter 13 bankruptcy can certainly help you out of your financial dilemma. While you can’t discharge these types of debts, you can reorganize your total debt load making it easier to avoid falling further behind on child support.
Priority Debt in Chapter 13 Bankruptcy
When you file for Chapter 13 bankruptcy your debt is organized into secured and unsecured. From there, the unsecured debt is further categorized into priority and non-priority. The two types of debts are treated very differently in a chater1 3 bankruptcy case. While you may be able to discharge or whip out some or all of unsecured, non-priority debt, priority debts such as child support, alimony, and certain types of tax debt, must be paid back in full. When you create a Chapter 13 repayment plan, it must cover the full amount of priority debts owed over the lifespan of the repayment.
How Bankruptcy Helps with Back Child Support
Even though bankruptcy can’t eliminate or discharge your back child support it can eliminate other types of debt such as credit card and medical debt. This, in turn, should free up more cash for you to catch up on any priority payments and stay current.
Qualifying for Chapter 13 Bankruptcy
Qualifying for Chapter 13 bankruptcy is much easier than with a Chapter 7 bankruptcy in which a means test must be passed. In order to file a Chapter 13 bankruptcy, you must have a regular source of income. This doesn’t have to be a typical hourly or wage job but can also include other types of income such as unemployment or pension payments. In addition to the regular income, you must also have enough income to pay back your creditors what they would have received in a Chapter 7 bankruptcy. This is typically discovered by taking the means test. Contact our office to speak to a Houston bankruptcy lawyer if you are having difficulties staying current with your child support to find out your debt relief options.