Child/Spousal Support Obligations + Bankruptcy = ?

Apr 14

Child/Spousal Support Obligations + Bankruptcy = ?

Bankruptcy/Insolvency, Family Law Add comments

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to child or spousal support, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have family law lawyers in Toronto and Ottawa registered on Dynamic Lawyers who can offer information, advice, and assistance with respect to your child or spousal support matters.

The following question often arises in the family law context: how, if at all, will my child or spousal support obligations be impacted or affected by me going bankrupt? I would go about shedding some light on the issue in the following manner:

“Bankruptcy” is a formal legal status under the Federal Bankruptcy and Insolvency Act ["BIA"].
A debtor remains in bankruptcy until his or her discharge.
The BIA contains numerous provisions which deal with the bankrupt’s child and spousal support obligations.
Immediately upon the bankruptcy of the debtor, all proceedings by unsecured creditors against the bankrupt are halted (to prevent some creditors from having an advantage over others and to prevent multiple court proceedings and depletion of the bankrupt estate assets).
Except with the permission of the bankruptcy court, no creditor may commence or continue any law suit, execution, garnishment, or other proceeding against the debtor [ss. 69.3 and 69.4 of the BIA]. This is referred to as a “stay of proceedings”.
This stay applies only to “provable” claims [defined in s. 121 of the BIA] which arose before the date of the bankruptcy. “Non provable” claims may proceed outside of the bankruptcy proceedings.
This stay does not apply to “provable” claims for child or spousal support [s. 69.41 of the BIA]. This means that child and spousal support claims may be prosecuted in a matrimonial court against the bankrupt, without permission from a bankruptcy court, while the debtor spouse is an un-discharged bankrupt and even afterwards.
Child and spousal support claims may proceed only against assets which have not vested in the trustee and which are not amounts payable to the trustee [ss. 69.41(2), 121(4), and 68].
Bankruptcy does not prevent the matrimonial court from dealing with support arrears and ongoing payments.
Bankruptcy may have an impact on both the amount and enforcement of support orders.

So child or spousal support obligations are not released or extinguished during or after coming out of bankruptcy. Going bankrupt will, however, have an impact on issues of enforcement, quantum, and availability of assets to pay for those child or spousal support obligations.

For more information about the relationship of bankruptcy and child/spousal support obligations, go to Dynamic Lawyers and make a post. We have family law lawyers in Toronto and Ottawa registered who can help answer your questions and concerns and represent you in resolving such family law matters.