Child Support

[BigTexMex]

Hello everyone,

Been a big reader here, not so big on posting. I’m in month 42 of 60, and things were going smooth till about 3 months ago. I was giving my child’s mother $400 mo ( informal child support), which was listed in my schedule J, however after cutting ties with her she went to the AG and filed for child support. The court ordered support included $21,000 in back child support, difference between the $900-1000 I “ should have” been paying a month to her. So, the payments started being deducted from my payroll, which includes monies towards the arrears. However it won’t be enough to pay it off in 18 months, when I’m done with my plan. Will this prevent my discharge? I consulted with my attorney, but have not heard back from him, so getting a little nervous about the situation. Anybody else had this curveball thrown at them before?

[justbroke]

Ummm... I hope that you told them (and your bankruptcy attorney) you were in an active Chapter 13. The child support enforcement agency could be stayed by the automatic stay in the Chapter 13. They would usually seek bankruptcy court approval to touch any of your post-petition money for a pre-petition debt when it is in the plan. Now, I will say that the court will approve this anyhow, but they can't just go touching your earnings - to pay a pre-petition arrears -- while in an active Chapter 13 bankruptcy with money in the plan for this. This is because all your earnings in a Chapter 13 are property of the bankruptcy estate.

This could get you in a pickle at discharge since DSOs (domestic support obligations) must be current.

You will definitely need to discuss this with your attorney on the path forward. The child support agency, or the child's mother, should have filed an administrative claim in the Chapter 13 bankruptcy. Whether or not the pre-petition arrears can be dealt with sufficiently with only 18-months left in your Chapter 13 plan is something that I cannot answer.

(Edited to add that they should have probably filed a claim and you should probably have allowed it. If you have enough disposable monthly income (DMI), perhaps some of that could be used to pay an administrative claim for the arrears. I have no specific experience with child-support, only support and maintenance. While mine was court-ordered, my plan was still amended to include the payments, which wiped out my DMI.)

[eap82]

I have no answers for you but I hope you don't mind I tag mclawdawg so he can see this post. Just looking out for him so he can see your experiences. Best of luck to you and I'm sorry you are going through this.

[mclawdawg]

Thank you.

[BigTexMex]

justbroke , I did notify my child support attorney, and the mediator about my active CH13. Their answer was the AG doesn't care about your financial problems, the child has to be taken care of. The other problem this might create, is my state license for my profession that has to be renewed annually. I've read they can revoke it based on back child support, which makes no sense, since that's how I earn my wages. I just really hope all this money paid into the plan is for nothing in the end.

eap82 Thanks.

[justbroke]

I would definitely get back to my bankruptcy attorney which will know a lot more about this in the bankruptcy context. If they are trying to collect pre-petition arrears from your post-petition income, that was the crux of my question. If your plan provided for payment, Schedule J, and you were paying it outside the plan, then I don't see how they can collect pre-petition arrears covered by the Chapter 13 plan. I do understand that most post-petition orders can be upheld, but this was post-petition for pre-petition arrearages... which was my only question.

This is why I suggest that you should talk to your bankruptcy attorney, and I wish you had talked to your bankruptcy attorney during the child support hearings. Perhaps they don't care in Texas, but your plan is now in jeopardy.

[Carmella]

I hope your BK attorney can help you out.

I haven't been at this forum for a few days and reading this I also thought about mclawdawg

[BigTexMex]

Quick update on my situation. After sending my attorney the MSA (mediated settlement agreement) looks like the back child support is retroactive child support, and not child support arrears. The order was placed on 01/2022 and Based on that language, as long as I’m current on my payments at time of discharge, a discharge looks to be in order. The minute I fall behind on my child support payments they become in arrears and that’s where a problem can arise. Thanks to all who responded.

[justbroke]

Now that makes sense. They were not arrears which are treated differently in a Chapter 13 Plan... where arrears must be "cured" by the plan. I'm glad that your attorney was able to shed some light on this and that these are retro payments, and not arrears.

[Carmella]

BigTexMex I am glad it worked out for you!!



justbroke just a question what does "arrears" mean as it relates to Chapter 13. I hear the word many times here and just want to understand it better. Does it mean the expenses you are paying as part of the Chapter 13 plan here's an example. My old car loan was in the plan and if I fell behind would that be in arrears? I have a new car loan taken out after the Chapter 13 started, but before it is completed. If I fall behind on the new car would that be considered in arrears as related to Chapter 13? The new car loan is not "in the plan" as it didn't exist at that time ??

[justbroke]

Carmella arrears are simply past due payments. A Chapter 13 is actually a reorganization of the debtor. So, unlike a Chapter 7 "liquidation", a Chapter 13 allows the debtor to cure the arrears over the life of the plan. The Chapter 13 debtor receives the protection of the bankruptcy court to pay those arrears over 3-5 years.

Now, arrears are not specific to bankruptcy. Arrears are simply missed payments. So if you fell behind before filing Chapter 13, then those arrears are part of the plan. The plan cures the default in the loan because it makes the debtor pay back the past due amounts.

However, falling behind while you're in an active Chapter 13, while still arrears, may have significant impact on your Chapter 13. That impact could include needing to cure those arrears quickly (think 3 months), or having your case dismissed.

[justbroke]

I should clarify that arrears are not always a bad thing. For example, mortgage interest is collected in arrears. Some cell phone carriers bill in arrears. So it's not always a bad thing, until you are significantly in arrears or so far that it triggers a default under the contract.

[flashoflight]

Deliberately accumulating large pre-petition arrears can be a form of advanced pre-bankruptcy planning to reduce the unsecured creditor dividend or to reduce a small amount of non-exempt home equity in the case of mortgage arrears.

Post-petition arrears are very bad especially chapter 13 arrears, which also under bankruptcy law includes post-petition mortgage arrears.

[Carmella]

Thanks for the info it helps to understand the jargon.