When the Bankruptcy Code was revised in 2005, domestic support obligations such as child or spousal support were given a much higher priority. As a result, repayment of these obligations outweighs the debtor’s need to receive any fresh start financially.
While a Chapter 7 bankruptcy discharge will have no effect on domestic support obligations, filing Chapter 13 can stop some collection activities, albeit only for a short period. Individuals who are owed unpaid child support or alimony are treated as priority creditors in the Chapter 13 repayment plan. Past due support must be paid in full, and the debtor is responsible for any ongoing support during and after the case.
Even though child support and alimony cannot be discharged in bankruptcy, filing Chapter 7 or Chapter 13 bankruptcy can still allow a debtor to deal with other debts and create a new budget, allowing the debtor to make future domestic payments more comfortably. As I said at the beginning of the week, there are certain debts that cannot be discharged in bankruptcy. The best bet for consumers carrying a significant variety of debt is to speak with an experienced attorney.