Video Transcribed: Edward Kelly here answering your bankruptcy questions. We’re in the series on Special Debts. These are debts as opposed to your typical unsecured, personal loans, payday loans, credit cards, medical bills, you know, your basic unsecured debt that’s generally discharged in full in a 7 and according to what you can pay. The 13, these are debts that are treated differently.
We’ve talked about student loans and taxes, and I realized that I left one out. It’s another easy one, but I’ll just knock it out: child support. As you can imagine, and rightfully so, not dischargeable under any circumstances. Although, you will get credit, pretty much dollar for dollar in a Chapter 7 for that expense. So I’ve had a lot of people that, you know, come in and show me their income, and I think there’s no way you’re going to qualify, then come to find out they’re paying $800, $900 a month in child support. That can put you into a 7 if you might not otherwise qualify and allow you to discharge all of your unsecured debt, and then concentrate your energy on that child support.
That is another benefit to a 13. Well, it can be a benefit or not be a benefit, but you know the child support, particularly if there’s arrearage where they can be taking up to 60% of your income. If you roll that into a 13, you know, it’s like any other long-term debt, if it can be paid, generally, you’re going to have to deal with all of it within the plan.
So you may end up not having enough in your disposable income to take care of all that within the five years because you can’t extend beyond the five years. And there are some circumstances where you can go outside of that, not within the plan but, you know, you can have permission to pay that outside of the plan.
I’ve run into many cases, and this varies a little bit by district, where the entire sum, particularly of arrearage, now I’m not talking about ongoing child support, but the whole arrearage needs to be dealt with in the five years.
But again, if that’s the case, and you’ve got a lot of other debt, by freezing that into your Chapter 13 plan, you may get some benefits, depending on the proof of claim filed by the child support enforcement division as to penalties and fees and things like that. If you can take care of the whole thing within that five years, and you’re packing that into less time than it would have taken, you may be able to walk out of that Chapter 13 at the end with that child support arrearage taken care of.
Who knows, five years, kid may be aged out. You may be done with the regular support and all of your other debt discharged because I’ve seen a lot of people where the child support really gets them because they have all this other debt. So, although you can’t get rid of it, it’s kind of like taxes. And then unlike taxes, it doesn’t matter how old the child support is, you can’t get rid of it, rightfully so.
But you can use a 13 many cases to make that manageable. So again, that’s a pretty easy one. Child support, you’re not going to discharge it. And we will continue with some other special debts in the next addition of 888-Debt-line.
Once again, as always, you can reach me at 888-Debt-line or email me at email@example.com.