Child Support Debt in Bankruptcy
Child support debt in bankruptcy is treated differently from other unsecured debts.
This is because filing bankruptcy does not discharge (eliminate) your obligations to pay your child support debt.
Neither back owed child support, or ongoing child support payments can be eliminated in bankruptcy.
Most unsecured debts are eliminated by bankruptcy or a consumer proposal.
However, just as there are exemptions to assets you must surrender, there are exemptions to debts that are wiped out.
Support payments – spousal support or child support – are one of the exemptions to the unsecured debts that are discharged by bankruptcy.
The Bankruptcy & Insolvency Act, section 178 (1)(b), lays out
An order of discharge does not release the bankrupt from:
(b) any debt or liability for alimony or alimentary pension;
(c) any debt or liability arising under a judicial decision establishing affiliation or respecting support or maintenance, or under an agreement for maintenance and support of a spouse, former spouse, former common-law partner or child living apart from the bankrupt
In layman’s terms this means that your support payments will survive your bankruptcy.
Both prior and future payments must be made even after you receive your bankruptcy discharge.
Additionally, your wages can be garnished to cover support arrears.
Most wage garnishments are stopped by a bankruptcy or consumer proposal, but steps to garnishee your wages for support arrears are not impacted by a bankruptcy or proposal.
What if I Have Support Arrears and Other Debts?
Divorce and separation causes severe financial stress on families.
In fact, divorce is a leading cause of bankruptcy and consumer proposals.
When living together two incomes can take care of the household, but after divorce two household expenses, legal bills and other unsecured debts can quickly pile up.
Trying to manage child support payments and all the extra expenses that come with a separation can become a burden.
Filing bankruptcy to deal with your other unsecured debt can free up your cashflow.
This will make meeting your on-going (and any outstanding) child support obligations easier to manage.
To learn more about how support payments work in bankruptcy we recommend you contact a local bankruptcy trustee.