While the concept of a Chapter 13 is relatively straightforward, the technical details can be complex. The idea behind a Chapter 13 is to allow debtors with regular income the ability to discharge some of their debts while giving them three to five years to pay their debts. For instance, if you have fallen behind in your mortgage, you can use a Chapter 13 to catch up on those arrears. The Chapter 13 also protects your home from foreclosure during this time.
However, determining if you should file a Chapter 7 or a Chapter 13 can be a quite complex decision. For Chapter 7, there is a “means test,” which is designed to determine if you earn too much income for Chapter 7 and instead must file a Chapter 13.
The complexity here can be increased if you have been divorced before you file for bankruptcy. The calculations for the means test include your necessary expenses and your disposable income. If you pay or receive child support payments, these amounts will affect your outcome in the means test and your eligibility for Chapter 7.
If you are not eligible for a Chapter 7, you can file a Chapter 13, and you and your bankruptcy attorney will create a Chapter 13 plan. The plan will lay out your expected income and expenses for the duration of your Chapter 13.
Again, child support may affect this calculation and a bankruptcy attorney can help ensure that your plan and supporting schedules accurately reflect all of your disposable income and your necessary expenses.
Because these calculations will be unique for your specific situation, it is difficult to provide general guidance, and it is helpful to speak with a bankruptcy attorney before you make a decision.
Source: The Huffington Post, “My Child Support Is Making My Chapter 13 Bankruptcy Tough,” Steve Rhode, December 11, 2013