When you file for a Chapter 7 bankruptcy in Orange County, you can expect to get immediate relief from the majority of your creditors.
However, one you won't be able to escape is actually related to you: Your child.
Orange County Bankruptcy Lawyer Vincent Howard knows that there are avenues that can be taken in family court to address adjusting you monthly payments, but you can't be relieved of them in a bankruptcy.
Now with other debts, such as student loans, that generally aren't available to be forgiven in a Chapter 7, there are some remedies you could seek depending on circumstances of unique and substantial hardship. Child support is not the same, at least not with regard to bankruptcy law.
However, filing for a Chapter 7 can provide you with relief from other debts so that you can get together the resources to pay your back child support.
This issue was recently addressed in State of FL v. Davis, a bankruptcy case that underscored this.
Although this case happened on the other coast, we all operate under the same bankruptcy code in this country, so the case is still relevant for those in Orange County.
Here's what we know, based on the court records:
Michael and Maryanne Davis were divorced in Illinois back in early 1997. Per that divorce settlement, the Michael was obligated to make child support payments to his ex. Then in the fall of 2003, the case was transferred to Florida when Davis moved.
Then in March of 2008, an involuntary Chapter 11 bankruptcy (which is one that is filed by your creditors) was filed against Davis in Florida. A part of that bankruptcy plan indicated that failure to submit a claim to Davis' money by a certain date would bar any future claims of payment.
Michael's ex-wife received notice of this bankruptcy/. In fact, he was approximately $180,000 behind on support payments. She was listed as a creditor on the bankruptcy filings, but she did not make a formal claim to for arrears.
Neither the ex-wife nor the Florida Department of Revenue (the agency responsible for collecting support payments in that state) made a claim. The bankruptcy was discharged the following year.
The month after the bankruptcy had concluded, the state's revenue department filed a claim in bankruptcy court to collect child support on behalf of Maryanne. Micheal objected, and after brief oral arguments, the bankruptcy court actually sided with Michael.
Yet, the state department continued to try to collect on the support payments. Michael filed a motion for injunctive relief from the court, in light of the court's previous ruling, saying he had no further liability.
The court deemed that even though support payments weren't dischargable under bankruptcy code, Davis had no liability for the past due support, the claims based on res judicata, which is basically a way of saying the matter had already been closed when the department made its claim.
The Department of Revenue appealed. The district court reversed the bankruptcy court's earlier decision, ruling that Michael was in fact liable, based on previous case law. The U.S Court of Appeals for the Eleventh Circuit upheld the appellate court's decision.
In their conclusion, the federal justices reiterated that res judicata can't bar the post-bankruptcy collection of child support payments, which are non-dischargable.
Orange County Bankruptcy Attorney Vincent Howard at Howard Law can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.
State of FL v. Davis, Justia Dockets