When you are in debt, every dollar you spend is critical. As such, if you have gone through a divorce, domestic support obligations can make the change in your finances even more overwhelming. Unfortunately, when paired with unforeseen circumstances, like a long hospital stay or emergency home repairs, you may find yourself unable to make payments on time. If this reflects your circumstances, you may decide that filing for bankruptcy is in your best interest. However, it’s critical to understand what to expect during these difficult times, including whether or not your child’s support or alimony obligations will be discharged. The following blog explores what you should know about these matters, including the importance of a Montgomery County bankruptcy lawyer to assist you through this process and help you reach the best possible outcome.
Are Domestic Support Obligations Discharged During Bankruptcy?
When you file for bankruptcy in Pennsylvania, it’s important to understand that you will be granted an automatic stay. This essentially halts all collection efforts against you, including wage garnishments, lawsuits, and even phone calls from debt collectors. The automatic stay is important as it not only gives you a reprieve from collection efforts, but also ensures that all creditors are on even footing, by inhibiting collectors from receiving funds over another.
However, you should note that the automatic stay does have exceptions that will allow payments or legal action to continue. This includes domestic support obligations like alimony or child support payments.
Can Bankruptcy Help Me Catch Up on Overdue Payments?
In the event you want to file for bankruptcy, it’s imperative to understand your legal options. In general, you’ll find that both Chapter 7 and Chapter 13, overdue domestic support obligations are considered priority debts. This means that they will be paid first over other debts because of their important status.
During Chapter 7, your non-exempt assets will be liquidated, meaning they will be seized and sold by your trustee to repay creditors. During Chapter 13, your debts are reorganized and condensed into one monthly payment. You will make the payment to your trustee, who will then distribute the funds accordingly to each creditor. It’s important to understand that during both Chapter 7 and Chapter 13, you are still responsible for making payments on time. However, the pause on other payments can allow you the opportunity to catch up on and stay on top of your support obligations.
Navigating the bankruptcy process can be incredibly overwhelming, which is why it’s in your best interest to work with an experienced attorney to guide you during this process. At Mudrick & Zucker, P.C., our team understands how complicated this process can be, which is why we will do everything in our power to help you through this complex matter, so you can reap the full benefits of filing. If you’re ready to proceed, contact us today to learn how we can represent you.
