Imagine the following scenario: an Illinois couple has a child together. They split up; one parent gets custody of the child, and the other pays child support. A few years later, the parent paying child support falls on hard times and files for bankruptcy. What effect does the bankruptcy have on the parent's child-support obligation?
Good question. But before answering it, let's look at how court orders (such as a child-support order) are usually treated. Normally, parents must pay. If not, they will land in serious legal hot water. Their wages may be garnished, their licenses taken and their passport frozen.
So, does anything change when a parent files for bankruptcy? The answer in regard to child support payments is no. Child support debt cannot be discharged by filing for bankruptcy. In fact, child support is a priority debt, which means that when assets are sold during a bankruptcy, it must be paid first.
Additionally, the state can block the person who owes child support from getting or renewing a passport. The reason why passports are not protected by a bankruptcy filing is that a passport is not considered property for purposes of the bankruptcy. Rather, a passport is and always remains property of the federal government.
Bankruptcy is just one curve ball that can be throw at parents during the child-support years. Others include illnesses, job losses and how to handle erratic income (this situation is especially common for business owners and salespeople who get paid by commission).
Illinoisans who run into one of these curve balls may benefit from discussing their situation, their choices and the pros and cons of each with an experienced family-law attorney.
Source: acf.hhs.gov, "Enforcing Child Support when the Obligor is in Bankruptcy," Accessed April 6, 2015