Accrued debt can be overwhelming to the point where payments exceed the amount of income a person earns. When making payments becomes insurmountable, bankruptcy may be a solution that allows breathing room and the time to regain a financial foothold on life.
However, there are certain obligations that may not be discharged or restructured by filing for bankruptcy. One such payment includes a parent’s financial support to a child.
Child Support as a Legal Responsibility and Child’s Right
Pursuant to Canada’s federal child support statutes and regulations, all children should benefit from their parents’ financial means despite the obstacles of separation or divorce. When parents separate, they are encouraged to develop a plan of shared support and financial contributions to provide for their child’s comfort, safety, health, and success.
In Canada, child support is as much a parental responsibility as it is a child’s right. The federal guidelines focus on four primary goals in establishing mandatory support payments:
• benefit to the child
• objective calculations to reduce tension between parents
• improve the efficiency of the legal support process
• the consistent treatment of spouses and children in similar circumstances
Final support payments are determined by courts using the federal guidelines to establish a base amount and any additional considerations.
Child Support Orders are Final
Generally, an order or agreement for child support is considered a final order of the court. While there are certain exceptions, orders cannot usually be altered unless there is a change in circumstances of the parties.
When a parent’s income changes significantly or a custody situation changes — for instance, a non-custodial parent begins housing a child — it may give rise for a legal reconsideration of the support amount and payment structure. However, only a court with appropriate jurisdiction is allowed to alter the existing support order.
Making regularly ordered support payments is the law and ignoring the law can have serious consequences. Wage garnishment, fines, and even jail time are risks that every parent takes when they abandon their financial commitment to a child. Bankruptcy may help avoid the pitfalls of not paying court ordered support because of too much debt.
Declaring Bankruptcy Can Make Support Payments Easier
Canada’s Bankruptcy and Insolvency Act prohibits discharging “any debt or liability under a support, maintenance or affiliation order, or under an agreement for maintenance and support of a spouse, former spouse, former common-law partner or child living apart from the bankrupt.”
While child support is excluded from discharge when filing for bankruptcy, insolvency proceedings may allow a payor parent greater financial flexibility to make support payments. When other debts can be reduced or discharged, bankruptcy may reduce total monthly obligations that ease the burdens that make paying child support difficult.
Bankruptcy is not a mechanism for avoiding parental obligations, but it can make meeting those obligations easier. Before pursuing a bankruptcy, consider the impact on a child’s life and consult an attorney to determine the best avenue.
Maintaining Support Builds Relationships
Child support is an integral part of parenting after a separation or divorce. When a parent provides a stable and ongoing source of financial support, it bolsters other aspects of the parent-child relationship. Support payments help ensure a child’s success that is every parent’s dream. The stigma of a bankruptcy may weigh heavily on a parent, but it is nothing compared to the comfort of a child’s comfort and future.