Is Child Support or Alimony Included As Income in Bankruptcy?
Before you file bankruptcy your attorney will ask you for verification of your last six months of income as a factor to determine Means Test qualification. The Means Test is a household income limit you must fall below according to the number of household occupants in order to qualify for a Chapter 7 bankruptcy.
Child support and alimony are considered income and can greatly impact your ability to qualify for the Means Test. Income from child support or alimony may put you over the Means Test limit causing you to file a Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy.
In addition to having an impact on your Means Test calculation child support and/or alimony will also be considered when determining your monthly budget moving forward. It’s important that you discuss any form of domestic support obligation (child support or alimony) you receive with your attorney before filing your bankruptcy.
Can I File Bankruptcy if I'm Behind on Child Support or Alimony?
Yes! You can still file for bankruptcy even if you are behind on alimony or child support. However, be aware that child support and alimony payments are non-dischargeable in a bankruptcy. In other words, these debts cannot be wiped out in bankruptcy.
If you are paying child support or alimony, you may get behind on these payments and the state court may threaten you with jail time for being behind. A Chapter 13 bankruptcy will usually allow you get “caught up” on these payments, avoid jail time, and pay the arrearages on the child support or alimony back through the Chapter 13 plan payments over three to five years making monthly payments to the Chapter 13 Trustee. The Chapter 13 Trustee forwards these payments to the person entitled to the child support or alimony. The bankruptcy does not stop present or current child support or alimony payments, but it can help you get caught up on these late payments and avoid possible jail time.
Does Bankruptcy Wipe Out Child Support or Alimony?
Unfortunately, alimony and child support cannot be wiped out in bankruptcy. Alimony and child support are considered “priority” debts that must be repaid. In other words, the bankruptcy laws view alimony and child support as very important debt that one cannot just wipe out with a bankruptcy.
However, if you are behind on your alimony or child support payments, bankruptcy can be helpful for you. If you are behind and have been threatened to go to jail, you could file a Chapter 13 Bankruptcy, which is a repayment plan. In a Chapter 13 bankruptcy, you repay a portion of your debts over a period of three to five years. At the end of your bankruptcy, you will no longer owe any unsecured debt (credit cards, medical bills) and will be caught up on any debts that you were behind on, such as child support.
A Chapter 13 bankruptcy is helpful for a person who is behind on alimony or child support payments because it helps you get caught up on your payments and will avoid any potential jail time. Other than completing a Chapter 13 bankruptcy you cannot wipe out alimony or child support in bankruptcy.
