Child support arrears are known as the amount of past-due, unpaid child support that builds up when payments are not made. Arrears are a formal debt separate from your regular monthly payment and are owed under a court order. Courts rarely forgive past-due arrears, and North Carolina is a strict state with harsh penalties. So, can filing for bankruptcy help with child support arrears? Keep reading to find out!
Child Support and Bankruptcy
Child support is a non-dischargeable debt, similar to student loans and taxes. Whether you file Chapter 7 or Chapter 13, you can’t discharge this debt, but bankruptcy can make payments more manageable. Paying child support is non-negotiable, and the penalties for not paying your child support in North Carolina can include withholding money from your paycheck, seizing tax returns, suspending your license, filing court charges, or even issuing a warrant for your arrest. Child support payments can only be changed by family courts, but filing for bankruptcy can help make room in your current budget for child support payments.
Chapter 7 Bankruptcy
When you file Chapter 7 bankruptcy, an automatic stay is put in place, which keeps creditors from hassling you about debt. This does not protect you from lawsuits that may be filed against you if you have child support arrears. But Chapter 7 bankruptcy can discharge other debts, freeing up income you can put toward child support. Under Chapter 7, the court appoints a trustee to review all of your paperwork, meet with creditors, and sell any of your nonexempt property to pay back your creditors. This trustee will be your main point of contact the entire time your bankruptcy case is open.
Chapter 13 Bankruptcy
Filing for Chapter 13 bankruptcy is slightly different. Through Chapter 13, you can set up a repayment plan to repay certain debts, including child support arrears. You must keep up with the plan and make payments on time to stay current, but this form of bankruptcy allows you to restructure debts and catch up over time. Chapter 13 plans can last 3 to 5 years, but they allow you to keep property, get debt relief, and prevent wage garnishment.
How to Choose
A few specific factors can determine whether Chapter 7 or Chapter 13 is right for your situation. If you don’t own many possessions, or you don’t have an income you can rely on, then Chapter 7 might work best for you. On the other hand, if you have some non-exempt property, Chapter 13 allows a payment plan that might help you keep possession of your assets. Plus, the long-term payment plan allows you to catch up on any past-due debts.
Consult a Professional
Filing for bankruptcy is a serious and tedious process, so we recommend scheduling a consultation with a professional at Craft Law Offices. Filing for bankruptcy can be challenging, and past-due bills piling up or creditor harassment can be overwhelming. Leslie Craft has over 30 years of experience dealing with bankruptcy cases, navigating the process, and understanding the requirements. We want to help you eliminate debt and get back on track to financial freedom. Trust Craft Law Offices to guide you through the filing process – contact us today! 252-752-0297