Bankruptcy can help you get a fresh start financially by eliminating many of your debts or giving you a chance to catch up on debt payments. Filing bankruptcy in New Jersey does not eliminate child support arrearages, but it may allow you to stop making payments on your arrearages for a while.
When you file bankruptcy, an “automatic stay” goes into effect, pausing most collection efforts against you, including foreclosures, garnishments, bank levies and other debt collection efforts. You must stay current on your child support payments while your stay is in effect, and bankruptcy does not erase your child support debts. Your creditors can ask the bankruptcy court to lift this stay under certain circumstances, thereby permitting them to continue collection efforts.
In a Chapter 7 bankruptcy, your assets are sold by a court-appointed bankruptcy trustee to pay your debts, unless those assets are exempt from sale under state or federal law. Many Chapter 7 filers have no nonexempt assets, so there is nothing for the trustee to sell. However, Chapter 7 neither eliminates your current obligation to pay child support nor eliminates or reduces past due child support obligations. If you owe past due child support, you will owe the same amount after your bankruptcy is complete that you owed when you filed. However, if the bankruptcy court lifts your automatic stay for child support purposes, you must make payments on your past due support while your bankruptcy is in process.
Chapter 13 bankruptcy reorganizes your debt over a three to five year repayment plan. In New Jersey, as in other states, the bankruptcy court requires you to make the payments as scheduled in your repayment plan. The repayment plan must include your ongoing monthly child support payments as well as the entire amount of your arrearages, unless the recipient of your child support payments agrees to another method of payment.
After you successfully complete your repayment plan in a Chapter 13 bankruptcy, you may receive a discharge, or elimination, of your unpaid debts. However, you are not entitled to a discharge if you are not current with your child support payments, including any and all monies past due. No portion of your child support -- or other family support obligations -- can be discharged in bankruptcy.