The issue of domestic support payments often becomes a hot button for anyone who is on either end of the court ordered transaction. Intended to be a tool of financial support for children in separated homes, these payments play an important role in any Tampa bankruptcy case.
Priority Payments
If you are the person who is ordered to pay domestic support payments and file for bankruptcy, you should know that domestic support payments are not generally eligible for discharge in the normal sense. These debts are considered “priority debts” and must be repaid as determined in the original court order. In other words, you cannot have these debts erased and, instead, will be required to repay them. If you were to file for Chapter 7 bankruptcy, the court would take a look at your disposable income level and nonessential assets. Either of these two could be used to satisfy your debt obligations. If you were to file for Chapter 13, the court would allocate payment on these debts before any other creditor would receive payment as part of your wage earners plan.
If you are the person who receives domestic support payments and file for bankruptcy, you will be required to report these payments as “income” in your petition. Even though they aren’t considered earned income, they do play a part in the overall evaluation of your financial standing. Generally, the court only asks for the amount received in the last 6 months prior to your filing. These payments could influence your filing in two ways, (1) affecting your Chapter 7 eligibility in the means test, or (2) affecting your payment amount in your Chapter 13 wage earners plan.
As always, it is important to speak with a Tampa bankruptcy attorney about all of your debt obligations and income sources before filing your case.