Does Bankruptcy Affect Family Support?
If you are considering filing for personal bankruptcy in South Florida, it is important to understand how a bankruptcy filing is likely to impact (or not to impact, as the case may be) family support payments. For debtors who currently receive child support or alimony, it is important to learn more about how that money will be treated in your bankruptcy filing. And for debtors who currently owe any kind of family support, including child support or alimony, it is critical to understand how this type of debt is treated in a bankruptcy case. Our West Palm Beach bankruptcy lawyers can explain in more detail.
Family Support Debt You Owe is Considered a Priority Debt that Cannot Be Discharged
For any South Florida residents who are planning to file for any type of personal bankruptcy — Chapter 7 bankruptcy, Chapter 13 bankruptcy, or Chapter 11 bankruptcy — it is critical to understand how any family support debt you owe will be treated. In short, the US Bankruptcy Code considers any family support debt, including child support or alimony, a priority debt. In addition, this type of debt is always an exception to discharge — it cannot be discharged in any kind of bankruptcy filing.
What does all of this mean in practice? If you file for a liquidation bankruptcy under Chapter 7, you will continue to owe any family support debt even after you receive a discharge of other types of debts. To be clear, you will need to repay family support debt even if you otherwise get a “fresh start.” And if you are filing for a type of reorganization bankruptcy, as a priority debt, all of the family support debt you owe must be repaid as part of your repayment plan.
Family Support Payments You Receive Are Typically Exempt If You File for Bankruptcy
Under the Florida Statutes, family support debt is exempt to the extent that it is reasonably necessary for the support of the debtor and/or the support of the debtor’s dependents. In other words, alimony is exempt to the extent it is necessary to the support of the debtor, and child support payments are exempt to the extent that they are necessary for the support of the debtor’s dependent child or children.
What this means is that family support payments you receive will not usually be counted as income for purposes of determining Chapter 7 eligibility or the terms of a Chapter 13 repayment plan, and this income will not be subject to liquidation in a Chapter 7 case.
Contact Our West Palm Beach Bankruptcy Attorneys Today
Whether you receive or currently owe any type of family support, it is important to seek assistance with your bankruptcy case from an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller. While this type of debt is usually exempt for a debtor filing for bankruptcy who receives family support payments, family support debt is never dischargeable in a bankruptcy case and will be treated as a priority debt, as we have discussed above. To speak about the particular details of your bankruptcy case, contact our firm today.
Sources:
law.cornell.edu/uscode/text/11
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222ContentsIndex.html
