Can Child Support Obligations Be Discharged in Bankruptcy?
Child support obligations are a critical financial responsibility for parents, designed to make sure the well-being of children following a separation or divorce. In Maryland, as in other states, these obligations are treated with significant legal weight, reflecting the state’s commitment to protecting children’s financial security.
When individuals face overwhelming financial challenges, they may consider bankruptcy as a means to alleviate debt. However, a common question arises: Can child support obligations be discharged in bankruptcy?
Kathleen M. Kircher, Attorney at Law, in Annapolis, Maryland, can help provide a comprehensive examination of the interplay between child support and bankruptcy in Maryland, covering federal and state laws, the types of bankruptcy, exceptions to discharge, enforcement mechanisms, and practical considerations for parents.
Understanding these legal principles is essential for anyone traversing financial distress while maintaining child support obligations.
Are Child Support Obligations Dischargeable in Bankruptcy?
Under federal bankruptcy law, child support obligations aren’t dischargeable in either Chapter 7 or Chapter 13 bankruptcy. This rule is codified in 11 U.S.C. § 523(a)(5), which explicitly states that debts for domestic support obligations (DSOs), including child support, are excepted from discharge.
Additionally, 11 U.S.C. § 507(a)(1) classifies DSOs as first-priority unsecured debts, meaning they take precedence over other debts in bankruptcy proceedings.
Child Support in Maryland
In Maryland, child support is governed by the Maryland Family Law Code (Title 12, Subtitle 2). Child support is calculated based on the Maryland Child Support Guidelines, which consider factors such as each parent’s income, the number of children, childcare expenses, and healthcare costs.
The goal is to make sure that children maintain a standard of living comparable to what they would have had if the parents remained together.
Child support obligations typically include:
Monthly payments: Regular payments to the custodial parent to cover the child’s living expenses.
Arrears: Past-due child support payments that accumulate if a parent fails to meet their obligation.
Medical support: Contributions toward the child’s health insurance or medical expenses.
Other expenses: Payments for extracurricular activities, education, or special needs, as ordered by the court.
Child support orders are issued by Maryland circuit courts, often during divorce, separation, or paternity proceedings. These obligations remain in effect until the child reaches the age of 19 (or graduates from high school, whichever occurs first, in certain cases) or until modified by the court.
Overview of Bankruptcy and Debt Discharge
Bankruptcy is a legal process under federal law that allows individuals or businesses to eliminate or restructure debts they can’t pay. In the United States, bankruptcy is governed by the Bankruptcy Code (Title 11 of the United States Code), and cases are handled in federal bankruptcy courts.
In Maryland, bankruptcy filings are processed in the U.S. Bankruptcy Court for the District of Maryland, with locations in Baltimore and Greenbelt.
The two most common types of bankruptcy for individuals are:
Chapter 7 bankruptcy: Known as “liquidation” bankruptcy, Chapter 7 allows individuals to discharge most unsecured debts (e.g., credit card debt, medical bills) by liquidating non-exempt assets to pay creditors. After the process, eligible debts are discharged, relieving the debtor of further liability.
Chapter 13 bankruptcy: Known as “reorganization” bankruptcy, Chapter 13 allows individuals with regular income to create a repayment plan to pay off debts over three to five years. At the end of the plan, remaining eligible debts may be discharged.
A key feature of bankruptcy is the automatic stay, which temporarily halts most collection actions, such as wage garnishments, lawsuits, or creditor harassment, upon filing. However, not all debts are dischargeable, and child support obligations fall under a special category of debts known as “priority debts.”
Definition of Domestic Support Obligations (DSOs)
A domestic support obligation is defined under 11 U.S.C. § 101(14A) as a debt that is:
Owed to or recoverable by a spouse, former spouse, child, or governmental entity (e.g., Maryland’s Child Support Administration).
In the nature of alimony, maintenance, or support (including child support), as determined by a court order, separation agreement, or divorce decree.
Established before, during, or after the bankruptcy filing.
Understanding the definition of domestic support obligations under 11 U.S.C. § 101(14A) is critical for confirming compliance with their prioritization in bankruptcy proceedings.
In Maryland, this includes:
Ongoing child support payments.
Child support arrears (past-due amounts).
Interest on child support arrears, if ordered by the court.
Medical support obligations.
Other court-ordered payments for the child’s benefit (e.g., educational expenses).
Recognizing these specific obligations confirms compliance with Maryland’s laws and their proper treatment in bankruptcy or other legal proceedings. Work with an experienced family law attorney to further understand these obligations.
Chapter 7 Bankruptcy and Child Support
In Chapter 7 bankruptcy, most unsecured debts, such as credit card balances or personal loans, can be discharged. However, child support obligations remain fully enforceable. Key points include:
No discharge of child support: Neither ongoing child support nor arrears are discharged in Chapter 7. The debtor remains liable for all amounts owed.
Automatic stay limitations: The automatic stay doesn’t halt child support enforcement actions, such as wage garnishments, tax refund intercepts, or license suspensions, initiated by Maryland’s Child Support Administration or the custodial parent (11 U.S.C. § 362(b)(2)).
Priority of child support: If the debtor’s assets are liquidated, child support debts are paid before other unsecured debts, making sure that custodial parents or the state receive funds first.
While Chapter 7 may discharge other debts, freeing up income to pay child support, it doesn’t relieve the debtor of their child support obligations.
Chapter 13 Bankruptcy and Child Support
Chapter 13 bankruptcy offers a structured repayment plan, which can provide some relief for individuals struggling with child support arrears. Key points include:
No discharge of child support: Like Chapter 7, Chapter 13 doesn’t discharge ongoing child support or arrears. However, arrears can be included in the repayment plan.
Repayment of arrears: Child support arrears must be paid in full over the three- to five-year repayment plan. The debtor must also continue making ongoing child support payments outside the plan to remain compliant.
Automatic stay benefits: The automatic stay in Chapter 13 can temporarily halt certain enforcement actions for child support arrears, such as contempt proceedings or license suspensions, provided the debtor remains current on ongoing payments and adheres to the repayment plan.
Priority status: Child support arrears are treated as priority debts, meaning they must be paid before other unsecured debts in the plan.
If the debtor successfully completes the Chapter 13 plan, non-priority unsecured debts (e.g., credit card debt) may be discharged, potentially improving their ability to meet child support obligations. However, failure to comply with the plan or ongoing child support payments can lead to dismissal of the bankruptcy case and resumption of enforcement actions.
Maryland’s Child Support Enforcement Mechanisms
Maryland has robust mechanisms to enforce child support obligations, which remain in effect even during bankruptcy. The Maryland Child Support Administration (CSA), part of the Department of Human Services, oversees enforcement. Common enforcement actions include:
Wage garnishment: Up to 65% of a parent’s disposable income can be garnished for child support, including arrears (Md. Family Law § 10-123).
Tax refund intercepts: Federal and state tax refunds can be intercepted to pay child support arrears.
License suspensions: The CSA can suspend driver’s licenses, professional licenses, or recreational licenses for non-payment.
Bank account seizures: Funds in the debtor’s bank accounts can be seized to satisfy child support debts.
Contempt of court: Failure to pay child support can lead to contempt proceedings, resulting in fines or jail time.
Credit reporting: Unpaid child support is reported to credit bureaus, impacting the debtor’s credit score.
Passport denial: The U.S. State Department may deny or revoke passports for individuals owing $2,500 or more in child support arrears.
These enforcement actions aren’t paused by a Chapter 7 bankruptcy filing and are only temporarily halted in Chapter 13 if the debtor complies with their repayment plan. Maryland’s commitment to child support enforcement underscores the non-dischargeable nature of these obligations.
Exceptions and Related Debts
While child support itself is non-dischargeable, certain related debts may be treated differently in bankruptcy:
Property settlements vs. support obligations: Debts arising from divorce or separation agreements, such as property settlements or equitable distribution, are distinct from DSOs. Under 11 U.S.C. § 523(a)(15), non-support divorce-related debts (e.g., a lump-sum payment to a former spouse) are non-dischargeable in Chapter 7 but may be dischargeable in Chapter 13 if the debtor completes the repayment plan.
Attorney’s fees: Attorney’s fees incurred in child support litigation are generally considered part of the DSO and are non-dischargeable if they were awarded to enforce or establish child support.
Overpayments: If a parent overpays child support and seeks a refund, this debt may be dischargeable in bankruptcy, as it isn’t considered a DSO. However, such cases are rare and require court approval.
Parents should consult a bankruptcy attorney to distinguish between DSOs and other divorce-related debts, as the classification impacts dischargeability.
Contact a Family Law Attorney
In Maryland, child support obligations aren’t dischargeable in bankruptcy under either Chapter 7 or Chapter 13, reflecting federal and state laws that prioritize children’s financial security.
Kathleen M. Kirchner is ready to help you through the custody process. We serve Anne Arundel County, Maryland, as well as throughout Queen Anne's County, Calvert County, Prince George's County, and Howard County. Reach out today.