If you fall behind on child or spousal Support in California, you can be hit by some super aggressive collection actions by your ex-spouse or support enforcement agency. Those actions can't be prevented or stopped by filing a Chapter 7 "straight bankruptcy" case. It takes a Chapter 13 "adjustment of debts" filing.

Today's blog post gets into

• what actions California law allows your ex-spouse or support enforcement agency to take against you if you fall behind on support payments
• why filing a Chapter 7 bankruptcy may help but doesn't usually help you enough
• how filing a Chapter 13 case can give you the help you need
• the importance of seeing a bankruptcy lawyer before the support collection actions are taken against you

WHAT DOES CALIFORNIA LAW ALLOW BESIDES GARNISHING MY PAYCHECKS?

Garnishing your wages is just the start.

You can lose the right to renew your driver's license if you fall only 30 days behind on child support payments. (Calif. Family Code Section 17520). Your license can be suspended if you fall four months behind. (Calif. Family Code Section 17520(e)(3)). You're given 150 days to catch up on the support. Then within that time your local support enforcement agency must inform the DMV that that you are current in order for your license not to be suspended. If your license gets suspended, it's suspended indefinitely, until you're in compliance with the support order and the DMV receives a release from the support enforcement agency.

It gets much worse. These license non-renewal and suspension laws also apply to occupational and professional licenses issued by the State of California. In fact, they apply to virtually any business, occupational, professional, and recreational "license, certificate, credential, permit, registration, or any other authorization" issued by California "boards, commissions, departments, committees, examiners, entities, and agencies." (Calif. Family Code Section 17520(a)(2)). Losing such a license or other authorization often means the loss of your ability to earn a living in your occupation or profession.

CAN BANKRUPTCY FIX THIS BY WIPING OUT MY UNPAID CHILD OR SPOUSAL SUPPORT DEBT?

No. No form of bankruptcy can "discharge"—legally right off—child or spousal support. This includes both your ongoing monthly support obligation and any unpaid support you're behind on. Bankruptcy can discharge most debts, but not child and spousal support. See Sections 523(a)(5) on exceptions to discharge, and 101(14A), of the United States Bankruptcy Code.

The federal bankruptcy system respects the state divorce systems. State divorce laws and divorce courts decide on the appropriate amount of child and/or spousal support. Bankruptcy law does not get in the way of those legislative and judicial decisions.

SO WHAT DO I DO IF MY SUPPORT PAYMENTS ARE TOO HIGH?

As quickly as possible you need to ask for a reduction in the support amount, or its elimination altogether, in the same divorce court that determined the support amount. You need to show a change in circumstances since the support order was made. The change can be in the income of one or both parents, loss of employment, change in parenting time, change in needs or expenses, or in any of the other factors used to calculate support. See this information from the State of California Courts website on changing child support or spousal support.

The new support amount can either be agreed upon between you and your ex-spouse (or local support enforcement agency), or it can be determined by the divorce court judge. Either way the previously ordered support continues until a new support order is entered. That's why it's important to act quickly to officially lower it instead of just letting it continue at an inappropriately high amount.

CAN'T BANKRUPTCY AT LEAST STOP ACTIONS TO COLLECT SUPPORT?

Mostly not. As I said at the beginning, regular Chapter 7 bankruptcy does not stop the collection of any support obligation. This applies to the collection both of ongoing monthly support and any accrued unpaid support. So, any garnishment or other collection of monthly support payments would continue after you would file a Chapter 7 case. Same thing with the collection of any accrued unpaid support.

BUT DOESN'T FILING BANKRUPTCY GIVE YOU A TEMPORARY BREAK FROM COLLECTIONS?

It's true that filing bankruptcy usually stops the collection even of debts that can't be discharged, such as recent income taxes or student loans. That happens through the power of the "automatic stay." See more about this in my earlier blog post, "The Automatic Stay in a Chapter 7 and Chapter 13 Bankruptcy."

But child and spousal support debts are an exception to the automatic stay". The U.S. Bankruptcy Code explicitly excludes "the collection of a domestic support obligation" from the stopping power of the automatic stay. Section 362(b)(2)(B) of the Bankruptcy Code. A "domestic support obligation" includes both child and spousal support, including any that accrue "before, on, or after the date" of filing the bankruptcy case.

COULDN'T FILING A CHAPTER 7 "STRAIGHT BANKRUPTCY" CASE STILL HELP ME?

Sure, if immediately stopping the collection of all or most other debts, and then discharging all or most of those debts helps you enough, then Chapter 7 may solve your child/spousal support problem. This is more likely if you are not too far behind in your support payments, and if the collection actions have not gotten unbearably aggressive.

If you are current on your support payments but struggling to pay them along with your other debts, Chapter 7 may be the right solution. Or if you are behind but are confident that you'd be able to catch up quite quickly after discharging your other debts, again Chapter 7 may be what you need. Discuss this thoroughly with your bankruptcy lawyer so that you are being accurate about what other debts you'll be able to discharge.

CAUTION: After discharging your other debts through Chapter 7 your ex-spouse may be tempted to ask for an increase in your ongoing support because of this change in your circumstances. This does not apply if there is no longer any ongoing support.

IS THERE ANYTHING ELSE I CAN DO IF CHAPTER 7 ISN'T HELPFUL ENOUGH?

As mentioned in my first paragraph, unlike Chapter 7, Chapter 13 CAN prevent and stop the collection of unpaid accrued support.

That's huge. If you are behind on child or spousal support payments Chapter 13 gives you up to 5 years to catch up. And, crucially, it protects you throughout that time. Your Chapter 13 case protects you from your ex-spouse or your local support enforcement agency. And it also protects you from all of your other creditors as you deal with all your debts at once through a court-approved payment plan.

That payment plan is put together based on what you can afford to pay. It also takes care of everybody you owe so that you don't worry about not being able to catch up on support because of the aggressiveness of another creditor.

SO HOW DOES THIS WORK IN PRACTICE UNDER CHAPTER 13?

Assume you're 5 months behind on your $800 per month child or spousal support, so $4,000 behind. If your ex-spouse or your local support enforcements agency hasn't already done so, it can garnish you wages and take the actions outlined earlier to collect that $4,000, as well as the monthly $800. You could lose the income you need to pay your mortgage and vehicle loan, your other creditors, and put food on the table. You could lose your right to drive your car or to work in your chosen occupation.

Filing a Chapter 7 case would not stop you from any of this. That is, it wouldn't unless you had some way to catch up on the $4,000 back support very fast.

If you didn't have a way to catch up fast, Chapter 13 "adjustment of debts" could well be your best option. Here's what filing a Chapter 13 case could do:

• immediately stop any present collection action on the $4,000 unpaid support
• prevent any new collection action on that $4,000
• budget enough money to pay the $800 monthly support going forward so you'd not fall any further behind
• create a payment plan with a single monthly payment to all your creditors, based on what you could afford to pay
• this payment plan would include enough in the payments to catch up on the $4,000 in unpaid support—as little as about $67 per month stretched out over 5 years
• prevent your other creditors from getting in the way of doing all this

DOES CHAPTER 13 ALWAYS WORK?

You have to follow the Chapter 13 requirements to make it work. Your income has to be steady enough to be able to propose and execute a payment plan of consistent payments.(There can be room for some inconsistency.) Your income has to be large enough so you can keep current on ongoing support plus pay enough into your Chapter 13 plan.

If you don't make an ongoing support payment on time, your ex-spouse/support enforcement agency can ask the bankruptcy court for your protection to be taken away. And if you do not make your plan payment on time, same result. If the court agrees, you would again be subjected to aggressive collection actions.

So, Chapter 13 powerfully gives you a break. But if you don't follow the rules, you could lose that advantage easily.

SINCE FILING CHAPTER 13 STOPS SUPPORT COLLECTION ACTIONS WHY SEE A LAWYER BEFOREHAND?

First, it's better to prevent bad things from happening to you in the first place. Sure it's nice to be able to stop a garnishment of your paycheck or bank account after it has started. But why wait until after they've already begun hurting you?

Imagine the hassles and real hardship that would come if you lost your driver's license? Or maybe even more so, what if you lost your license allowing you to work in your occupation was suspended? Sure, it's great to be able to un-suspend such licenses or stop garnishments by filing under Chapter 13. But why go through the unnecessary misery if it can be prevented by finding out your options and preventing those bad things from happening?

Second, in the last section I stressed that Chapter 13's protection is conditional. You can lose it if you don't follow the rules. Those rules tend to be enforced more flexibly if you don't wait until the collection procedures have really ratcheted up against you. The ex-spouse/support enforcement agency will tend to be less aggressive if you've dealt with the problem earlier. The bankruptcy judge will likely be more flexible.

Third, being proactive would likely save you money, be better on your credit record, and preserve options. For example, you would more likely be able to solve your problems with a Chapter 7 case instead of a Chapter 13 one. The former takes usually less than 4 months; the latter 3 to 5 years. Also, past-due child support accrues interest in California at 10% annually (California Code of Civil Procedure Section 685.010(a)) , and penalties can accrue at the rate of "6 percent of the delinquent payment for each month that it remains unpaid, up to a maximum of 72 percent of the unpaid balance due". (California Family Code Section 4722). There are fees for reinstating a driver's license You can save a lot of money and anxiety by getting advice about how to avoid all this as soon as possible.

And finally, if you'd ever get in the crosshairs of an aggressive support collection campaign against you, it would likely make you very cash poor and desperate for an immediate solution. That's not the best time to be calmly considering your options. That's not the best time to be coming up with money for bankruptcy court filing fees and lawyer fees. In fact, you may even be unable to use your legal options if you are pinned so tightly to the wall financially.

Don't let that happen to you. Find out how Chapter 7 or Chapter 13 can help you get a handle on your support debts, sooner rather than later.