Filing for Bankruptcy Can Help Pay Child Support
Tuesday / June 12, 2007
Money that might be paid toward other debts can be freed up to pay child support.
One of the top sports stories has been the bankruptcy of former NFL wide receiver André Rison. According to these stories, a bankruptcy court has ordered Rison into involuntary bankruptcy so that back child support of $105,000 and other claims can be paid.
How does putting Rison into bankruptcy help get his child support paid? In a bankruptcy, unsecured debts can be wiped out or reduced. If a debt is secured (for example, a house secured with a mortgage, a car secured by an auto loan, etc.) the collateral for the loan is either repossessed or a payment plan agreed to and confirmed by the bankruptcy court.
But some debts, by law, are said to be "nondischargeable." This means that the bankruptcy filing does not wipe them out or reduce them. These debts must be paid regardless of the bankruptcy. Per 11 U.S.C. § 523(a)(5), one of the categories of nondischargeable debts is child support.
Because bankruptcy discharges or reduces most debts, but child support cannot be discharged or reduced, a bankruptcy filing by a noncustodial parent can help that parent to pay child support: What money is available can be used for child support instead of for other debts. This is true not only for voluntary bankruptcy but for involuntary bankruptcy as in Rison's case.
How does putting Rison into bankruptcy help get his child support paid? In a bankruptcy, unsecured debts can be wiped out or reduced. If a debt is secured (for example, a house secured with a mortgage, a car secured by an auto loan, etc.) the collateral for the loan is either repossessed or a payment plan agreed to and confirmed by the bankruptcy court.
But some debts, by law, are said to be "nondischargeable." This means that the bankruptcy filing does not wipe them out or reduce them. These debts must be paid regardless of the bankruptcy. Per 11 U.S.C. § 523(a)(5), one of the categories of nondischargeable debts is child support.
Because bankruptcy discharges or reduces most debts, but child support cannot be discharged or reduced, a bankruptcy filing by a noncustodial parent can help that parent to pay child support: What money is available can be used for child support instead of for other debts. This is true not only for voluntary bankruptcy but for involuntary bankruptcy as in Rison's case.