When you and your spouse file for divorce, it can be an incredibly overwhelming time, especially if you are ordered to make domestic support payments, like alimony or child support. Unfortunately, if you experience more financial hardship, such as the loss of your job or unexpected medical bills, you may be unable to make ends meet while still ensuring you make the necessary payments to your ex-spouse. As such, you may wonder if bankruptcy can help your current financial situation. The following blog explores what you should know about filing for bankruptcy while making support payments to your spouse, as well as the importance of working with Franklin County bankruptcy lawyers to assist you through these difficult times.
Does Bankruptcy Eliminate Child Support or Alimony Obligations?
Filing for bankruptcy allows you to eliminate eligible debts following the liquidation of assets during Chapter 7 or through a repayment plan during Chapter 13. However, it is important to understand that certain debts are not eligible for discharge during bankruptcy, which includes domestic support obligations like child support or alimony. In fact, during bankruptcy, these are treated as priority debts, meaning they will be paid in full first before other creditors can receive debt repayments.
It’s important to understand that while bankruptcy cannot eliminate debt incurred as a result of support orders, it can help you catch up on payments. This is because the bankruptcy process can free up other income, allowing you to put it towards your support orders.
Does the Automatic Stay Apply to Domestic Support?
Generally, when someone files for bankruptcy, they will receive an automatic stay. This essentially pauses all collection efforts against the filer, including wage garnishments, lawsuits, and repossession of property.
However, it is imperative to understand that this does not extend to any domestic support obligations you are responsible for. This means that, while filing for bankruptcy, the family court may continue to establish orders for child support or alimony, collecting payments from assets that are not part of your bankruptcy estate, and even enforcing income withholding for current orders.
What Should I Do Before Filing if I Pay Support?
If you wish to declare bankruptcy but you currently pay child support or alimony, understanding how to proceed is critical. Generally, the most important thing you should do is to collect all records and statements you have in relation to the support orders you pay. This includes the current orders, your payment history, and your current financial documents. You should also continue to make support payments. It’s critical to note that while some payments made before bankruptcy can be considered preferential, this does not apply to domestic obligations.
When you are ready to declare bankruptcy in Ohio, it’s imperative to understand the importance of working with an experienced attorney with Cousino & Weinzimmer. Our firm understands how difficult these matters can be to navigate, which is why we will do everything in our power to help guide you through these complicated legal matters to help you receive a financial fresh start. Contact our team today to learn more.
