There are ways to manage domestic support debt in bankruptcy

Getting a divorce can impact life in many ways. It can be emotionally stressful to end a marriage and split parenting time with the kids. However, divorce can also be financially stressful. After all, individuals have to divide their marital assets, and one spouse often has to pay child support and possibly alimony.

The amount of these payments depends on a variety of circumstances, but these monthly payments can add up quickly and might leave individuals facing significant debt.

Support payments can be expensive, lead to debt

Failing to pay alimony or child support can have significant consequences. Parents in New Mexico might face wage garnishments or even criminal penalties if they do not make support payments on time – not to mention that they could also face considerable debt if they get behind on payments.

According to the most recent data from the Office of Child Support Enforcement; in 2017 nearly 5.5 million parents owed more than $114 billion in child support payments. That is an alarming total, and yet it is easy to see how domestic support debt can accrue since:

• The average child support payment is $430 each month; and
• The average alimony payment is 30% of an individual’s monthly income.

On top of ordinary expenses and other loan payments and debts, can make these payments overwhelming. 

Unfortunately, child support and alimony payments cannot be discharged in bankruptcy. These support payments fall under the category of priority payments. This means that individuals must pay these debts in full, so they cannot discharge them.

Parents still have options with Chapter 13 bankruptcy

However, that does not mean that parents cannot address domestic support debt in their bankruptcy filing. Individuals might not be able to discharge support debts in bankruptcy, but bankruptcy can still help them manage debt resulting from support back payments.

If individuals file Chapter 13 bankruptcy, the customized repayment plan they create includes priority debts as part of the plan payments. This allows individuals to establish easier terms to manage alimony or child support debt and possibly pay off this debt over the course of the plan which is three to five years.