THE EFFECT OF BANKRUPTCY ON CHILD SUPPORT ENFORCEMENT
Laura W. Morgan
Many noncustodial parents seek relief from financial obligations in Bankruptcy Court, either under Chapter 7 (discharge) or Chapter 13 (reorganization). The Bankruptcy Reform Act of 1994 provided increased protection for debts owed to the children and former spouses of debtors in bankruptcy. P.L. No. 103-394 (1994).
Although child support is not dischargeable, there are certain bankruptcy provisions that the practitioner should be familiar with. First, 11 U.S.C. § 362(a) provides an automatic stay on creditor actions. Actions to establishment of paternity and actions to establish or modify alimony, maintenance, or support are exempted from the automatic stay provision. 11 U.S.C. § 362(b)(2). Because these actions are exempted from the stay provision, the creditor need not seek a relief from the stay.
Child support is not dischargeable in bankruptcy. 11 U.S.C. § 523 added a new exception to discharge for some debts arising out of divorce that are not in the nature of alimony, maintenance, or support.
Debts for child support, alimony, and maintenance have a high priority over other debts of the debtor. 11 U.S.C. § 507(a). If the full child support debt is not paid as part of the disbursement, the child support debt remains the debt of the debtor and must still be paid.
In bankruptcy, the debtor is required to file a schedule or assets, liabilities, exempt property, current income and expenditures, and a statement of financial affairs. 11 U.S.C. § 521. This can be extremely valuable information for the creditor parent. Further, the creditor parent can intervene in the bankruptcy proceeding without charge to contest the amount of arrears.
Property that is exempt from the claims of creditors can nonetheless be reached for enforcement of child support. S. & C. Home Loans, Inc. v. Farr, 224 B.R. 438 (Bankr. N.D. Cal. 1998).