State Collection Rights After Chapter 7

by Mary Jane Freeman Google
Child support may still be collected by state child support enforcement agencies after bankruptcy.

Child support may still be collected by state child support enforcement agencies after bankruptcy.

Noel Hendrickson/Digital Vision/Getty Images

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.

Debts Not Discharged

The U.S. Bankruptcy Code specifically prohibits the discharge of certain debts. These include recent taxes, student loans, child and spousal support, restitution payments, and government fines and penalties. Since state governments serve as the collection agency for many of these obligations, such as child support and taxes, they may continue collection of these debts after a debtor receives his discharge under Chapter 7. For example, if a parent is required to pay child support, this obligation is not removed by his bankruptcy discharge because child support is a nondischargeable debt. As such, the state child support enforcement agency has the same collection rights after a parent's bankruptcy as it did before the parent filed for Chapter 7. This means the state may continue enforcing child support orders by taking such actions as garnishing wages, seizing bank accounts and tax refunds, and placing liens on property.