Child Support and Bankruptcy

Child support payment issues are something several readers have asked us about. The issue I hear the most is the ability to pay child support payments is often tied to the individuals ability to deal with other financial issues. If someone is behind in their debt payments, this compounds the problem for the payer.

Let’s talk about how child support issues are addressed in a bankruptcy or a consumer proposal.

Does child support go away in a personal bankruptcy or a consumer proposal?

  • NO, child support obligations pursuant to the Family Law Act, are not discharged in a bankruptcy or a consumer proposal (section 178 (1)(b)(c))
  • But there are special rights for the recipient if arrears exist in the past 12 months – the recipient has a priority claim over other unsecured creditors (section 136 (1)(d.1))

Child support payments during a bankruptcy

  • The costs of bankruptcy are based on the individual’s net income, which is calculated after payment of child support. Therefore, there is an incentive during a bankruptcy to remain current on payments of child support as it reduces the amount that one pays in a bankruptcy.

The Family Responsibility Office (aka FRO) is involved in a personal bankruptcy or a consumer proposal in many cases, especially once arrears in payments occur. The FRO uses garnishments as a method to collect for the payers’ pay cheque. The garnishment can be large enough to seriously affect the amount that someone has available for rent, cars, living expenses and debts.

Many individuals I have met with in our Kitchener office are making payments to child support, but they can no long keep up with their debts and living expenses. What they can do is chose to file a personal bankruptcy or a consumer proposal to deal with their unsecured debts to help get them back on their feet financially.

If you are struggling with your debt level and this is making it difficult to keep up with your child support, contact us today to talk about your debts. We can discuss an appropriate plan for you.