Bankruptcy provides much needed debt relief and a fresh financial start. Although bankruptcy erases most debts, existing child support obligations are not among them. This means that the parent filing bankruptcy is still on the hook before, during and after the bankruptcy. But if a parent owes back child support, filing for bankruptcy may help him catch up.
Like most debtors, Illinois bankruptcy filers typically choose Chapter 7 or Chapter 13 bankruptcy. With Chapter 7, debtors give up their nonexempt assets to pay off creditors. With Chapter 13, debtors pay some or all of their debts through a repayment plan that lasts about three to five years. Whatever debts remain unpaid at the end of either bankruptcy are discharged. Most debts are eligible for discharge, including credit cards, medical bills and personal loans.
Domestic Support Obligations
The U.S. Bankruptcy Code expressly prohibits the discharge of domestic support obligations. Illinois debtors cannot discharge child support or alimony obligations. But, if a parent is past-due with child support payments, filing for bankruptcy may provide some breathing room -- an automatic stay goes into effect the moment a bankruptcy petition is filed, effectively barring creditors from engaging in collection activity while the bankruptcy is underway. Thus, wage garnishments for arrears and other collection measures stop. If a past-due parent filed for Chapter 13, the repayment period enables him to catch up on unpaid child support in a structured way over time.