Simple Solutions To Financial Freedom

Bankruptcy and Child Support Debt

On Behalf of | Oct 2, 2018 | Bankruptcy |

emotions of bankruptcy

If you have child support debt bankruptcy will not eliminate your child support obligations, however, there are some options. Take for example the story of Kenneth Dempsey:Kenneth filed for bankruptcy owing back child support.   His Chapter 13 plan was confirmed on May 16, 2014.   While the plan provided that Kenneth would pay the back child support debt in full, the amount and length of time to pay the back child support in total did not satisfy the Florida Department of Revenue, which had the authority and ability to collect back child support.Therefore, the Department of Revenue sent out a garnishment notice to Kenneth’s employer which in turn froze part of Kenneth’s wages.

Next Steps in the Story

Kenneth filed a Motion in the bankruptcy court asking that the Department of Revenue be held in contempt of the bankruptcy court arguing that the Department’s efforts to garnish Kenneth’s wages directly conflicted with the Chapter 13 Plan which stated that the entire back child support would be paid “inside the plan.”

The bankruptcy court declined to hold the Department in contempt but it did order that the Department to:

  1.  Terminate its income withholding order;
  2.  Refund to Kenneth any amounts received and not yet disbursed; and
  3.  Amend its proof of claim to reduce its amount by all sums received from Kenneth’s employer after confirmation and not refunded.

On appeal to the United States District Court, the court ruled that the bankruptcy court had the power to enjoin the Department and force the Department to live by the terms of the plan.  The Department’s only remedy would have been to object to the Plan, which it did not.  The court reached this conclusion even though it was fully understood that no part of the claim for back child support was subject to being discharged.*

Bankruptcy Attorney is a True Advocate

Kenneth’s lawyer served him well.  That lawyer understood that just because a debt is not dischargeable doesn’t meant that the debt cannot be modified in a way that makes it easier for the debtor to pay it.  Chapter 13 filings are the ideal way give a debtor breathing space so that a debtor can more easily manage his or her payments.

Burdened with a Child Support Debt that Can’t Be Discharged?

If you are burdened with a debt that cannot be discharged, such as an educational loan, a Chapter 13 bankruptcy filing may give you some relief from this burden.   We at the Bankruptcy Advocates have protected our clients from oppressive collection efforts from even government entities such as the IRS for the last four decades.  Just because a debt is not dischargeable doesn’t mean that we can’t modify that debt to more favorable terms.

Southern Illinois Bankruptcy Attorney law firm Bankruptcy Advocates, Carbondale and serves a wide geographic community including:

  • Carbondale
  • Murphysboro
  • Marion
  • West Frankfort
  • Johnston City
  • Benton
  • Herrin
  • DuQuoin
  • Pickneyville
  • Chester
  • Sparta
  • Vernon
  • Harrisburg
  • Vienna
  • Anna
  • Jonesboro

We are a debt relief agency. Our southern Illinois bankruptcy attorneys help people file for relief under the Bankruptcy Code. The first consultation is always free. Give us a call at 618-549-9800 or email us at [email protected]  to speak about your case or legal matter. Convenient appointment times are available.

*See Dempsey v. Florida Department of Revenue, 2017 WL 2656154 (E. D. Tenn. 2017)