How Does Bankruptcy Affect Child Support and Spousal Maintenance in Indiana?

If you have standing spousal and child support orders but have been getting further and further behind, you may be feeling desperate. 

If you have debts beyond your child support and alimony payments, you could even be considering a bankruptcy declaration to give yourself a clean slate, financially speaking. However, before you file, learn more about how declaring bankruptcy will affect your Indiana child support and spousal maintenance orders.

When Declaring Bankruptcy Can Help

Falling behind on your child support or alimony payments puts you in a dire situation. Your wages could be garnished; a lien could be placed on your property; your assets and bank accounts could be seized; and, you could even be arrested for failure to pay. 

Fortunately, by declaring bankruptcy, you may be able to avoid these consequences. But it’s important to note that alimony and child support are not dischargeable debts that will be erased. The bankruptcy declaration will give you the opportunity to get caught up on your payments so you can be free of the mountain of debt. 

Here’s what happens to your child support and alimony debts when you file Chapter 13 and Chapter 7 bankruptcy below.

Chapter 13

In a Chapter 13 bankruptcy declaration, the filing party will formulate a repayment plan over a period of three to five years. Their debts will be assigned priority or non-priority status, with child support and alimony considered priority, and other debts such as credit cards and hospital bills non-priority. 

From there, the courts will look at how much available income the debtor after paying necessary household expenses. A certain amount will be applied to the child support and alimony debts so they can be repaid in full over this time period; non-priority creditors will wind up accepting less and eventually the remaining balance will be discharged. 

Chapter 7

Chapter 7 bankruptcy is much different than Chapter 13 in that the debtors assets will be liquidated and sold to repay their debts. 

Spousal maintenance and child support will be priority and other debts non-priority just as they are in Chapter 13. Any income raised from the sale of the assets will first be distributed to the child support and alimony debts; whatever is left will go to the non-priority debts.

Reach Out to an Indiana Bankruptcy Attorney

If you are having trouble making child support and alimony payments, in addition to your other financial responsibilities, a highly trained Indiana bankruptcy lawyer at Rowdy G. Williams Law Firm may be able to help you get on track by pursuing a bankruptcy declaration. 

Call 812-232-7400 or fill out the quick submission form below to schedule your free, no-obligation case review.