The quick answer is no, you cannot. But if you are being garnished for past due domestic support, then a Chapter 13 may be helpful. You can stop that garnishment and then pay the amount in a 3 year or 5 year plan. This often will help your budget and let you pay the arrears at a pace you can afford.
In Colorado, individuals filing for bankruptcy are working toward achieving a new beginning by eliminating or restructuring their debts.
Bankruptcy also offers certain legal protections, such as halting typical collection practices from creditors. For example, creditors may no longer garnish wages, file suits, and make collections phone calls to debtors under what is known as an “automatic stay.”
Although determining which form of bankruptcy you qualify for and correctly navigating the entire filing process is often challenging, the light at the end of the tunnel is a refreshing financial reboot.
However, it is critical to be aware that certain forms of debt are not eligible for elimination through bankruptcy.
For instance, many individuals believe a common misconception that through either the liquidation process of a Chapter 7 bankruptcy or filing under Chapter 13, you may reduce or eliminate your obligation or debts for alimony and child support.
Can Child Support Debt be Eliminated via Bankruptcy?
Colorado assumes a default position on the matter of child support which is that both biological parents should provide financial support for their children. A parent may be exempt from their financial responsibilities under very few circumstances, like relinquishing parental rights via adoption. Still, in most cases, the parent must provide regular financial support. Suppose, however, a parent in Colorado declares bankruptcy — what happens to child support obligations?
After filing bankruptcy, a debtor receives protection from creditors’ activities under the automatic stay; however, non-dischargeable debts are exempt from this rule’s effects. The automatic stay does not prohibit or impede any legal action to determine or establish child support. Furthermore, the other parent maintains the right to collect child support from property not included in a bankruptcy estate.
Chapter 7 bankruptcy cannot discharge child support obligations or debt. Additionally, under a Chapter 13 repayment plan, the debtor must ultimately pay off unpaid or missed child support amounts.
Child support obligations are regarded as priority debts and are non-dischargeable.
In your repayment plan under Chapter 13, paying your prioritized child support debt may, in many instances, reduce other debts, such as unsecured credit card debt.
Note: Repayment plans do not include ongoing child support payments meaning individuals remain responsible for paying them on time. You must continue your regular child support and alimony payments after filing bankruptcy.
Allocations of alimony, also known as spousal maintenance, are payments made by the higher-earning spouse to the lower-earning spouse to protect the latter from falling into poverty during divorce proceedings or after. When bankruptcy is still pending, an automatic stay may avert family or domestic support obligations, but this is only temporary. As with other court-ordered family provisions such as child support, maintenance obligations are viewed as non-dischargeable. Payments must continue, and missed payments are prioritized debt. Some instances and nuances in specific cases may permit modifications to domestic support obligations.
Making Bankruptcy Work for You
In today’s economic landscape, slow pandemic recovery, and rising inflation, life is filled with financial challenges. If you lose your job, get sick, accumulate substantial debt due to relying on credit cards to get by, or otherwise experience financial hardship in Colorado, know you are not alone, and bankruptcy may be the right solution. Without legal counsel, Chapter 7 and Chapter 13 bankruptcy success rates are significantly lower. Factoring in non-dischargeable debts such as child support and alimony can make filing feel overwhelming. You can avoid considerable complications and needless struggles with guidance from an experienced and compassionate Boulder Colorado bankruptcy attorney.