Will You Lose Child Support Payments In Bankruptcy?
We have often discussed that child support obligations are not dischargeable in a bankruptcy but what about if you are not the one paying child support, but rather, you are the one receiving it? Can a bankruptcy court take your child support, if, for example, it was sitting in a bank account?
Is Child Support Money Really Yours?
It should seem like child support should not even be part of your estate, given that it is technically not your money, it’s your child’s money. However, there is no restriction on how child support money is spent. In other words, there’s nothing that specifically says that the money has to be used for the child.
No Specific Exemptions
The other problem is that Florida law does not provide any specific exemption in bankruptcy for child support. Federal law does—but Florida has opted out of federal bankruptcy exemptions.
That means that like any money, unless it is exempt, child support could be taken by a bankruptcy trustee for the benefit of your creditors. However, the answer to this question isn’t so clear, and there is an argument that debtors can use that could protect child support money from being taken in bankruptcy.
Using Federal Law
Under federal law (which again, Florida doesn’t use for bankruptcy), money that is needed for support of dependents is exempt—although that doesn’t say child support, it has been interpreted to mean and include child support.
The good news is that Florida law actually says that although Florida does not use federal bankruptcy exemptions, the “support exemption” under federal law is allowed to be used in Florida. That would mean that, applying federal law, child support can be exempted in a Florida bankruptcy.
This is supported by the fact that some courts have refused to garnish alimony or support payments in collections actions, as a matter of public policy, even though there’s no specific statutory exemption.
This exemption however only applied to bankruptcy. It will not protect child support payments from being garnished by a creditor, or to collect a judgment, or in any other collection efforts. This makes bankruptcy more powerful than standard asset protection when it comes to protecting child support.
It should be noted that support of dependents under federal law is only applicable where the money is necessary to support dependents. That means that if money is sitting in an account, unused, for months and months, a creditor could argue that the money actually is not needed to support any dependent. The moral when it comes to child support and bankruptcy may be “use it or lose it.”
Additionally, you may have to demonstrate how much in an account is child support, as opposed to other money that may be in an account which is otherwise not exempt, if the money is commingled.