If you are struggling with overwhelming debt, then filing for a Chapter 7 or Chapter 13 bankruptcy is sometimes a solution. Bankruptcy offers a fresh start and the ability to reorganize your finances, discharge certain debts, and regain your financial stability. Many debtors have questions about how filing for bankruptcy impacts child support payments. In this blog post, the Indiana bankruptcy attorney, Chris Arrington, will discuss what happens to child support income and obligations when a debtor files for bankruptcy in Indiana.

Can I file for bankruptcy on child support?

If you are receiving child support payments, you still have the right to file for bankruptcy in Indiana, but the money from your child support is not exempt from Chapter 7 liquidation. Some states offer exemptions for child support income. However, Indiana does not offer any such exemption. On the other hand, Indiana does allow for a homestead exemption, a wild card exemption, and a tangible property exemption among other notable exemptions. Such exemptions might be used to protect your child support payments from liquidation.

It is important to note that although your child support income isn’t exempt, you will not have to give up any child support that you receive after you file for bankruptcy. You can keep any money you receive from child support after your bankruptcy has been completed.

Those who are owed back due child support on the other hand, will not have their income protected. These payments are still considered part of your estate and as such, can be liquidated to pay back your lenders.

Can bankruptcy discharge your obligation to pay child support in Indiana?

Both alimony and child support are considered priority debts in Indiana. When you file for either a Chapter 13 or Chapter 7 bankruptcy, the court will group your debts into priority and nonpriority classifications. You are obligated to pay all your priority debts in full.

Since child support is considered a priority debt, you cannot discharge it and you must pay it back in full. You cannot discharge debts that support your child’s welfare or upbringing.

Does bankruptcy have any effect on child support payments?

While you can never discharge your obligation to pay child support, you can discharge other debts which will free up your resources to pay child support. You can, however, petition the court for a modification of child support payments if you can no longer pay your child support obligations. The courts will allow a modification of child support payments if there has been a substantial change in circumstances that warrant a modification. The courts will consider your bankruptcy when deciding whether to modify your child support payments or not.

Talk to a Danville IN bankruptcy attorney today

Chris Arrington represents the interests of debtors who need to file for bankruptcy. We also represent the interests of parents who need to modify child support payments. Call our office today to schedule an appointment, and we could begin addressing your needs right away.