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How Chapter 7 bankruptcy can affect child and spousal support

On Behalf of | Mar 19, 2024 | BANKRUPTCY LAW - Bankruptcy |

Understanding how Chapter 7 bankruptcy might change your responsibilities after a divorce is important. This is especially true if you’re responsible for paying child support or alimony. You may be asking, “Will these payments stop when I file for bankruptcy?”

Under state laws, you may still need to continue making payments such as child support or alimony, even during bankruptcy proceedings.

Exempted from liquidation

When filing for Chapter 7 bankruptcy in Wisconsin, know that the money you’ve designated for alimony and child support payments won’t be affected by the liquidation process. Specifically, Wisconsin law prevents creditors and the trustee (the person managing your bankruptcy case) from using this portion of your income to pay your debts.

Child support or alimony payments are crucial for the well-being of your dependents, such as your children or ex-spouse. Even in bankruptcy, you must continue making these payments to meet their needs as per the law.

Challenges in sustaining support payments

Wisconsin law recognizes that these payments aren’t just for you. They’re for the benefit of those who depend on you. So, these necessary payments are safe from your creditors. But the reality is that while you’re paying off creditors, you’re also making child and spousal support payments, which can feel like a significant financial burden.

Remember, you’re not alone during these times. There are many resources available to help you understand bankruptcy. However, these resources can be complex to understand if you’re unfamiliar with state and federal bankruptcy laws. If this is the case, you should consider seeking help from a legal professional. A legal professional can provide guidance, from exploring options to modify your support payments to suggesting other strategies to manage your financial situation.