Can accrued interest on child support payments be discharged in a Chapter 7?
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Can accrued interest on child support payments be discharged in a Chapter 7?
My wages are being attached for accrued interest on past child support in NM. All minors are emancipated and no current, or past due, child support remains owed, only interest. I have a statement from the state that clearly shows that to be true. I am considering a Chapter 7 filing due to the impact that the bi-weekly garnishment has upon my wages. It is making it impossible to support my current family. Is there any reason that interest on past child support obligations, would be any different that federal taxes owed and eligible for discharge?
Asked on August 25, 2011 Kansas
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
In order to have a clearer answer to your question as to whether or not accrued interest owed on child support payments can be discharged ina chapter 7 bankrupcty filing, it is best that you consult with an attorney who is experienced in such area of the law.
However, my understanding is that certain obligations such as child and spousal support cannot be discharged in a bankruptcy filing in that such a discharge would be contrary to public policy of the United States.
From a practical standpoint, most obligations being paid over time accrue interest. When the obligation is being paid down, the typical payment first goes to pay accrued interest and the balance owed principal. The way I read your question and facts is that even though you have paid the principal of the child support payments, you are being assessed for accrued interest for late payments. In reality, you might have principal and some accrued interest payments owing.
Another issue is that if a governmental entity is claiming monies owed by you for interest accrued on child support payments, you might not be able to discharge an obligation to a governmental entity in a Chapter 7 bankruptcy filing.
You should consult with a bankruptcy attorney.
Good luck.
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