By Ryan C. Wood
The bankruptcy code provides a strange treatment to collect post-petition child support payments.
No, you cannot discharge child support payments when filing for bankruptcy protection. See Bankruptcy Code §523(a)(5). This section provides that a discharge under section 727, 1141, 1228(a) or 1238(b) of this title does not discharge an individual debtor from any debt for a domestic support obligation. Section 101(14A) defines a domestic support obligation as a means of debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under and on and on and on it goes. Eventually the definition provides a domestic support obligation is in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent . . . . .
So Why File Bankruptcy If You Have a Domestic Support Obligation?
If you read the first paragraph then you know that you cannot discharge a child support obligation. What filing bankruptcy can do is limit how child support can be collected from you. I do not know when or how this issue would come up, but it is an interesting issue under the bankruptcy code and the effect of a discharge. It is worth discussing. I have never had a client come to me and want to know specifically how a bankruptcy discharge can affect her/his obligation to pay child support. Once someone finds out the underlying obligation is not dischargeable the conversation moves towards other obligations. So, a discharge in a Chapter 7 bankruptcy will prevent the collection of future support payments from the property of the bankruptcy filer’s Chapter 7 estate. Let me repeat this. A chapter 7 discharge will prevent the collection of future support payments from the property of the bankruptcy filer’s Chapter 7 estate. Okay, that is something then.
What Section of the Bankruptcy Code Governs This?
Section 362(b)(2)(B) provides in part the filing of a petition under section 301, 302, or 303 of this title, Title 11, does not operate as a stay of the collection of a domestic support obligation from property that is not property of the estate.
What is Property of the Bankruptcy Estate that Cannot be Collected From?
Section 541 describes what property of the estate is. To the torment of bankruptcy lawyers and trustees everywhere this section is very lengthy and very complicated, but for this article I will summarize and paraphrase. Upon commencement of a bankruptcy case property of the estate includes all legal or equitable interests of the debtor in property, all interests of the debtor and the debtor’s spouse in community property as of the commencement of the case that is under the sole, equal, or joint management and control of the debtor or liable for an allowable claim against the debtor or any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or become entitled to acquire within 180 days after such date by bequest, devise or inheritance, as a result of a property settlement agreement with debtor’s spouse, or of an interlocutory or final divorce decree.
So basically child support payments can only be enforced against a bankruptcy filer’s future wages and almost nothing else. Everything else will most likely be part of the bankruptcy estate. This could be a very powerful tool depending upon the circumstances. A car, house, jewelry, household good and much more is now not touchable to pay child support payments after filing for bankruptcy protection.
