Child support obligations – both on-going and arrears – cannot be discharged in bankruptcy. However, even non-dischargeable debts like recent tax obligations, secured installments notes and (sometimes) student loans are regularly included in Chapter 13 repayment plans.
How are child support arrearage balances treated in Chapter 13? Can the child support payer force a child support recipient to accept a 5 year payout of an arrearage balance?
The answer is “it depends.” And often, the child support recipient (i.e. the custodial parent) gets to make the decision.
First, you should understand that Section 362(b)(2)(B) specifically excludes from the automatic stay any action to collect a “domestic support obligation.” I read this to mean that if the child support payer files Chapter 13 bankruptcy, the automatic stay protection associated with a Chapter 13 filing should not stop a state court judge from hearing or ruling on a contempt action for collection of child support, nor should it stop a wage or bank account garnishment against the child support payer.
I would point out, however, that some state court judges will not assume anything about bankruptcy and will insist on an order from the Bankruptcy Judge before they will proceed with a child support collection case.Read more on How are Child Support Arrears Treated in Chapter 13 Bankruptcy?…
Filed under Bankruptcy, Chapter 13, Social Security Disability and Bankruptcy by on Mar 5th, 2011. 7 Comments. 
I received the following question from a reader of this blog that raises several interesting questions about auxiliary benefits and the bankruptcy process.
Your blog is the most helpful I have found on the web so far. God Bless You!
I have just been notified that my ex will be receiving SSDI, so in turn my son qualifies for benefits. I was told his benefits would be backdated to June 2010 so I should receive a lump sum. My question is since this is my son’s benefits, do I have to pay taxes on what he receives? I was going put it in his (my sons bank account for college). AND I was about to file BK (From the divorce) so could that be seized in the Ch 7 as assets?
Here are my thoughts, which represent general information about Social Security auxiliary benefits and the bankruptcy process: I believe that the auxiliary benefits payable to your son represents his money, not yours. You may be the payee for those funds, but the money is not yours. I would talk to your bank about how to set up the bank account correctly – it should be clear that the account is owned by him with you as the trustee of the account.
As far as taxes go, you need to speak to your tax preparer. Social Security payments can be taxable based on household income, so the answer to that question will depend on your personal financial situation. Read more on How are Auxiliary Benefits Treated When Custodial Parent Files Bankruptcy?…
Filed under Social Security Disability and Bankruptcy by on Oct 1st, 2010. Comment.
In my law practice I represent both Social Security disability claimants as well as Chapter 7 and Chapter 13 bankruptcy clients. Not surprisingly, many of my Social Security disability clients end up as bankruptcy clients. I also represent quite a few single moms in bankruptcy.
Read more on Chapter 7 Trustees Notify Custodial Parents When Child Support is Owed by Debtor…
Filed under Social Security Disability and Bankruptcy by on Dec 7th, 2009. 1 Comment.
Jonathan Ginsberg