In 2005, the bankruptcy code was modified. A portion of the code was modified to include additional protections for creditors that are due child support from bankruptcy debtors. The bankruptcy code requires trustees to provide additional notice of the bankruptcy filing to such creditors. Also, the code was modified to reflect that child support recipients are the first creditors to be paid from any proceeds that are obtained by a chapter 7 trustee from the sale of a debtors’ assets.
A New Jersey chapter 7 bankruptcy filing does not effect or change the obligation to pay child support and will not eliminate the debt. In other words, if the debtor owes child support, the same amount that is due prior to the filing will be due after the chapter 7 is complete. Also, if the debtor filing a chapter 7 owes child support, the bankruptcy filing will not stop the spouse, who is entitled to the support, from filing court papers requesting to enforce or modify the child support.
A New Jersey Chapter 13 requires the debtor to pay through the monthly plan (trustee) payment the total amount of the pre filing child support arrears. In addition, the debtor is require to pay the regular monthly and ongoing support payments to the recipient. The only exception is when the child support recipient agrees to the payment in another fashion.
The support arrears must be paid through the chapter 13 plan, no matter why the case was filed. In other words, a debtor may file a chapter 13 to save their house without any thought of their child support arrears. Under this scenario, in addition to payments on their mortgage arrears, the debtor must also pay the support arrears, through the monthly plan payments, and maintain sufficient income to pay the plan payments. If the debtor cannot afford the plan payments that include the support arrears, the case will likely be dismissed.
Additionally, a chapter 13 debtor is not entitled to a discharge after completion of all monthly plan payments, if the debtor is not current with all child support payments that were due from the date of the filing to the date of the completion of the plan.
If you are interested in learning more about how bankruptcy effects child support, you many contact the experienced New Jersey Bankruptcy Lawyer, Robert Manchel at 866.503.5655.