Bankruptcy Does Not Discharge Support Payments
Support Payment Debt in Bankruptcy
In Canada, bankruptcy can help you clear most of your unsecured debts.
However, certain things aren’t affected by bankruptcy.
This includes other financial obligations, like support payments.
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What are support payments?
The term refers to any court-ordered payments you have to make in support of someone.
Traditionally, three things are covered:
- Alimony payments;
- Spousal support payments;
- Child support payments.
If you have any ongoing support payments, they stay in place during and after bankruptcy.
So, you still have an obligation to keep making your payments.
Fail to do this, and you can end up in legal trouble.
What if you have debts due to support payments?
Some people may end up in debt because they missed support payments.
Unfortunately, these debts aren’t removed when you go bankrupt.
The law states that both arrears and ongoing payments will not be discharged.
In essence, if you owe a certain amount before bankruptcy, you still have to pay that amount afterward.
Furthermore, if more payments are still required, you have to keep up with them.
Full details on the law surrounding this can be found in the Bankruptcy & Insolvency Act.
It’s important to note that steps can be taken to ensure you keep making your support payments.
This typically involve wage garnishment, which is the act of taking your wages and using some to pay what you owe.
As you can imagine, this is quite a stressful thing to go through, so be sure you keep up with those payments.
Can you still file bankruptcy with support payments?
Yes, provided you have other debts to take care of.
You can’t file bankruptcy if you are trying to clear debts directly caused by support payments.
Or, if you think it’s a way of getting out of ongoing obligations.
However, many people with support payments also have other debts.
In fact, these debts make it hard for you to keep up with your alimony or child support.
This is why you’ve fallen behind on some of those payments.
If your debts are substantial enough to cause significant financial concern, bankruptcy can be a solution.
Your other unsecured debts will be cleared, allowing you more freedom to adjust your budget and keep up with your various support payments.
Be warned that bankruptcy is not something to take lightly.
It damages your credit rating and remains on your report for at least 6 years.
You will also have to make regular payments to cover the cost of bankruptcy, so bear that in mind.
It’s highly recommended you find other debt-relief options before resorting to this.
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You must tackle your debts before they get out of control.
If you need help with bankruptcy or any other debt-relief solutions, give us a call today.
We will book a consultation to discuss everything in detail with you.
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