Parents are legally bound to provide for their children. It is their responsibility allocated to them by the court, and the court makes sure that child support is being paid by both parents to financially support their children. However, sometimes, the parents are unable to pay child support because of bankruptcy.
Bankruptcy can be due to many reasons, e.g., loss of a job, a lower-paying job, exhausted funds, or other reasons. Under such circumstances, it becomes difficult for the parent to pay child support.
In case of increased debts and reduced income, you can file for bankruptcy in court. However, this does not relieve you from paying child support. Child support is a priority debt, and you have to pay your overdue payments. Being bankrupt does not mean that you stop paying child support.
After filing for bankruptcy, you have to notify the Child Support Division to come up with possible solutions to your problem. Usually, child support is paid first and is prioritized as compared to other debts, such as tax obligations.
Child support is not dischargeable, but you can modify the amount of financial support by coming to a mutual agreement with the other parent. This usually results in lowering the amount. However, this process does not strike off any overdue payments in case you have missed any.
The relationship between child support and bankruptcy is complex because, despite valid reasons, you cannot simply back off. If you stop paying child support, the court will get an attorney to use different methods to enforce child support responsibilities.
The best method in such a scenario is to reduce your unsecured debts and coordinate with the other parent to stay out of any enforcement laws. Make sure to seek help from a professional. They will help you find some debt repayment plans that pay off a portion of your debt so you can spend more on child support.
Lastly, any income you earn after filing for bankruptcy is not part of the bankruptcy estate. That income can be used to pay off child support arrearages under child support obligations.
When you file for bankruptcy, the court may decide to eliminate certain debts by discharging them. The debts that cannot be discharged by the court have to be paid. Filing for bankruptcy does not automatically discharge your student loans. If you wish to have your student loans discharged, you will have to file a separate motion with the bankruptcy courts.
Contrary to popular opinion, student loans can be discharged in bankruptcy. It may be difficult to discharge student loans but it is not impossible. In fact, the department of education has taken steps to ensure that this is possible.
It is true that when it comes to student loans it might be more difficult to discharge them than other types of secured debt. When it comes to student loans unless you can show that the payment of the loan poses an undue hardship on your family, your defendants, and you, it cannot be discharged.
It is difficult to meet the requirements for undue hardships and it rarely happens but it is possible. The courts use several methods to test if the person has faced undue hardship. They regularly use Brunner test to evaluate if your claim is valid. The other test that can be used is the totality of circumstance test.
When it comes to the totality of circumstance test, the court will consider your past, present, and future resources. They will also consider reasonably necessary living expenses and other relevant facts and circumstances.
For the Brunner test, you will have to file a separate motion with the bankruptcy courts. Thereafter you will have to appear in in front of a judge to explain your hardship. You must show that; you made efforts to repay the loans through past payments or arranging for payments, you are unable to maintain a minimal standard of living for yourself and your family, and that the circumstances that exist that are stopping you from repaying the loan, are unlikely to improve. However, it is up to the court to decide if you meet the undue hardship standard. If you are able to prove that you face undue hardships, your student loans will be discharged.
When filing a bankruptcy petition with the court, debtors are frequently not completely aware of the rights the bankruptcy code gives them. One of the most significant rights is the ability to be exempt from creditors’ collection efforts after the bankruptcy petition has been filed. An automatic stay is important because it stops creditors from continuing to try and collect a debt at the same time, the bankruptcy petition is being processed in the court system. It allows the debtor to carry less of the burden of accumulating debt.
It’ll keep your lights on. The automatic stay will stop the disconnection of your utilities for at least 20 days. Your utility company cannot threaten to cut off your water, electric, gas, or telephone service because you are late on a bill. Although the cost of a power payment alone rarely makes filing for bankruptcy a good idea, it might if you have other debt you can discharge. Be aware that the utility company can ask you for a deposit to guarantee future payments.
It’ll Keep You in Your Home. The automatic stay may be helpful if you are being evicted from your home, but it is typically only temporary. The automatic stay won’t impact these eviction proceedings if your landlord already has a judgment of possession against you at the time of filing; the landlord can carry on as usual. The automatic stay won’t help you much if the landlord claims that you have been harming the property or using illegal substances there. In other situations, the automatic stay may give you a few days or weeks to move out, but the landlord would likely ask the court to lift it and permit the eviction, and the court will probably grant his request.
It’ll Stop Garnishments. When you file for bankruptcy, most garnishments are immediately stopped. You can erase eligible debt through bankruptcy, such as credit card obligations and personal loans, and receive your total wage. Be careful that debts frequently garnished—like those for continuing alimony and child support—won’t be forgiven. Depending on the bankruptcy chapter filed, past-due child support and back taxes will vary.
Most people want to know if they may maintain their property while considering Chapter 7 or Chapter 13 bankruptcy. The short response is perhaps. There is a catch to Chapter 7 bankruptcy: if you own too much property, the bankruptcy trustee may sell some of it and distribute the proceeds to your creditors.
What kind of property may you keep, then? Exemptions—state rules that outline what you are permitted to protect in Chapter 7 and Chapter 13 bankruptcy—determine the answer.
Exemptions allow you to protect a specific amount of assets during bankruptcy, including a cheap automobile, business equipment, clothing, and a retirement account. If an asset is exempt, you won’t have to worry about it being taken or sold for the benefit of your creditors by the bankruptcy trustee assigned to your case.
Many exclusions cover particular types of property, such as a car or furniture, up to a certain dollar level. In some cases, an exemption safeguards the entire asset’s worth.
Anything that isn’t protected by bankruptcy law is regarded as non-exempt, and, in Chapter 7, the trustee may sell it to recoup the debt. How much the debtor in a Chapter 13 bankruptcy will have to pay creditors whose debt is not secured by collateral is based on the value of the non-exempt property.
Non-exempt assets can include:
● Secondary residential property such as a vacation house
● A second car
● Investments (not including retirement accounts)
● Recreational vehicles like boats or motorcycles
● Art
● Musical Instruments
● Fur coats
● Extra televisions
● Jewelry
● Coin collections
● Family heirlooms
There are numerous ways for a filer to prevent a non-exempt asset from being liquidated under Chapter 7 bankruptcy regulations. You can try to persuade the trustee to take an item of exempt property in its place if it’s important to you, or you can offer to repurchase the item from the trustee.
The trustee may determine that a piece of non-exempt property is too difficult to sell or isn’t valuable enough to warrant selling it to benefit the creditors. In that situation, the trustee will formally return the item to you by filing a Notice of Abandonment.
Medical bills are a significant source of debt for many American households. In the United States, health care costs are behind more than $88 billion of consumer debt.
Any hospital visit or emergency treatment can quickly become a financial nightmare, but certain medical problems are more costly or require more frequent care than others.
Most medical debt comes from specific diseases and conditions such as heart disease or gastrointestinal problems. Costly treatment is a major reason why so many Americans choose to reduce debt burdens by filing for bankruptcy.
As with specific diseases, chronic pain and injuries usually require ongoing treatment, and medical bills can add up for a long time.
When the unexpected happens, such as a car accident or a broken bone, medical debt is often the result of turning to credit cards without any other options.
Surgery, both emergency and planned, is among the most costly one-time medical expenses. Whether it is the knee, back or another type of surgery, these procedures often cost more than average-income households are ready to take on.
For some individuals, teeth are a top concern leading to high medical debt. Because many people do not have adequate or any dental insurance, they may have to cover dental expenses out of pocket.
According to research by the Kaiser Family Foundation, other top medical conditions that lead to debt include mental health issues, pregnancies and infections such as pneumonia and the flu. Whatever the reason for high medical debt, struggling adults should know that there is help out there.
