Can Someone in Chapter 13 Bankruptcy Get a Passport?

By Mary Jane Freeman

Debtors file for chapter 13 bankruptcy to obtain a fresh financial start by reorganizing and repaying their debts. Filing for bankruptcy doesn't make you ineligible for obtaining a U.S. passport. However, falling behind in child support payments can result in the denial of your passport application.

Debtors file for chapter 13 bankruptcy to obtain a fresh financial start by reorganizing and repaying their debts. Filing for bankruptcy doesn't make you ineligible for obtaining a U.S. passport. However, falling behind in child support payments can result in the denial of your passport application.

Chapter 13 Overview

A chapter 13 bankruptcy proceeding is a popular option for debtors. It allows them to enter into a repayment plan that lasts from three to five years. Unlike in a chapter 7 bankruptcy case, debtors are not required to give up any assets. Instead, they pay as many of their debts as possible over the duration of the plan. Any debts remaining unpaid when the plan period ends are typically discharged, and the debtor is no longer responsible for them.

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Eligibility for a Passport

In general, filing for, and participating in, chapter 13 bankruptcy doesn't prohibit a debtor from getting a passport. But a passport may be denied to a debtor prior to the bankruptcy filing if he is past due on child support payments. A parent with $2,500 or more in child support arrearages will be denied a U.S. passport. However, when the debtor files for chapter 13 bankruptcy, an automatic stay goes into effect prohibiting creditors from pursuing debt collection while the bankruptcy is underway. As a result, the debtor will no longer be denied a passport, at least not during the bankruptcy, unless the stay is lifted and child support services is permitted to restart its collection efforts.

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Bankruptcy & Child Support Arrears in New Jersey

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State Collection Rights After Chapter 7

When a debtor files for Chapter 7 bankruptcy, he receives a discharge of many of his debt obligations when the case concludes. Most debts are dischargeable, meaning the debtor is no longer on the hook for them once he receives his discharge. However, a few debts cannot be discharged in bankruptcy, including debts collected by states and the federal government.

What Is a Roll Up in a Bankruptcy Case?

Bankruptcy provides a debtor temporary protection from creditors while his financial affairs go through a reorganization. During the process, the debtor may need additional financing to keep a business going and to continue paying creditors under the bankruptcy plan. One method to keep the debtor's financing options open is to offer unpledged assets as collateral. Such a "roll-up" will give an unsecured creditor a higher, "priority" claim on the debtor's assets.

Disadvantages to Filing Chapter 13 Bankruptcy

Chapter 13 bankruptcy gives a debtor the opportunity to get back on his feet when the debt load becomes too much to handle. However, Chapter 13 bankruptcy proceedings carry potential disadvantages, such as negatively impacting the debtor's creditworthiness, so a debtor may choose to file another type of bankruptcy case or attempt to avoid bankruptcy altogether.

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