Unlike Chapter 7 “straight bankruptcy,” Chapter 13 can legally prevent your ex-spouse/support enforcement from chasing you and your assets.
In this “Making Sense” series, we’re helping you understand bankruptcy by explaining its main concepts through single sentences.
Today’s sentence: Only Chapter 13 can stop your ex-spouse or support enforcement agency from very aggressively pursuing you, and can give you a reasonable time to cure your support arrearage, if you follow the rules.
The Special “Automatic Stay” As Applied to Support
The “automatic stay” is the part of federal bankruptcy law that strictly prevents creditors from pursuing you or your assets in the collection of their debts once you file a bankruptcy case. But there’s an exception about child and spousal support debts which allows the collection of both regular monthly support obligations AND back support obligations under Chapter 7.
That exception also allows the continued collection of ongoing monthly support payments in a Chapter 13 “adjustment of debts” case as well. That seems reasonable since there is usually a court order that requires the payment of those monthly amounts. If monthly support should be stopped or reduced, the domestic relations court which entered the order requiring the support is the court that would need to make any such changes.
However, when it comes to the collection of BACK support obligations (support arrearage), Chapter 13 provides an exception to the exception: the automatic stay does prevent further collection of back support, as long as certain conditions are strictly met. This protection, and the time it gives you to catch up on the support, can be an extremely valuable benefit if you are in the collection crosshairs of your ex-spouse and/or the support enforcement system.
Aggressive Support Collection
If you are in those crosshairs, you may already know just how aggressive those collection tools against you can be. Based on the original court order mandating the support and usually without any further warning or other legal proceedings, your wages be garnished, bank accounts raided, and liens be placed on any of your real estate. Also your driver’s license can be suspended. In most states any other state-issued licenses can also be suspended, including your occupational and professional licenses that you may need to pursue your livelihood. Even hunting and fishing licenses may be able to be yanked.
The point is that you are very much at the mercy of your ex-spouse and the support enforcement agency if you are behind on your support obligations. You have very little leverage in negotiating a reasonable way to catch up on any arrearage you owe.
A Reasonable Amount of Time to Cure the Arrearage
Filing a Chapter 13 case completely changes that. Its power to stop the collection of back support puts the leverage back into your hands. Your ex-spouse’s or the support enforcement agency’s actions against you to collect the back support is stopped, and you are given time to pay the amount you owe in back support through your Chapter 13 plan, based on a reasonable budget.
Your Chapter 13 plan must earmark enough money to pay off the back support amount in full. And then you do in fact have to pay off that amount during the course of your 3-to-5-year payment plan. But as long as you follow the rules, you can fit the back support amount into your plan, and can pay other important debts (such as a vehicle payment or income taxes) along with or sometimes even ahead of the back support.
(Remember what we said above, that collection of ONGOING monthly support—assuming you are still required to pay it—can and presumably will continue, or if it hasn’t been happening can even start after you file your Chapter 13 case. It’s the collection of any BACK support payments owing as of the time your Chapter 13 case is filed that is legally stopped by the automatic stay.)
Following the Strict Rules
More than in just about any area, you have to follow the rules very strictly to keep being protected from collection of the back support. Besides earmarking enough money within your plan to pay off the support owed, you must:
- Keep current on your ongoing support, assuming you continue to owe it. This means being very clear about when the first monthly support payment is due after your Chapter 13 case is filed and making sure it is paid on time. Otherwise your ex-spouse/support enforcement can immediately inform the bankruptcy court that you’ve not made the payment and get permission to start/resume collection of the back support. Same thing with any subsequent support payments.
- Keep current on your monthly Chapter 13 plan payments. That’s what is paying the back support eventually (along with whatever other debts you are paying through the plan). So if you fail to make a single payment on time—at any time in your case—your ex-spouse/support enforcement can ask the court for permission to resume collection of the back support amount.
Chapter 13 gives you extraordinary power to stop collection of whatever support you owe at the time that your case is filed, but you need to be very vigilant to not squander that power.
The Sentence Translated
The sentence we started with is:
Only Chapter 13 can stop your ex-spouse or support enforcement agency from very aggressively pursuing you, and can give you a reasonable time to cure your support arrearage, if you follow the rules.
The translation is:
Bankruptcy is limited in its ability to help deal with child and spousal support debts, with Chapter 7 not able to directly help at all other than to free up money so that you can pay ongoing and back support. However, Chapter 13 DOES stop the collection of any support that you are behind on as of the date the case is filed, giving you a very flexible way to catch up on what you owe without the huge pressure that your ex-spouse or the support enforcement agency usually puts on you. But this huge benefit comes with conditions and responsibilities, so be sure to fully understand and follow the rules. If you do, you’ll come out of your Chapter 13 case current on your support obligation.