Filing for bankruptcy can be a stressful experience, especially for parents concerned about how it may impact their ability to care for their children. Chapter 7 bankruptcy is one of the most common types of bankruptcy, and while it can provide relief from debt, many parents wonder if it will affect their role as caregivers.
Filing for Chapter 7 bankruptcy will impact every family differently. If you have children to consider, there are a few key considerations to keep in mind.
Impact on assets
Chapter 7 bankruptcy involves liquidating non-exempt assets to pay off creditors. However, Oregon provides bankruptcy exemptions that protect essential assets such as your home or vehicle. These exemptions help ensure that parents maintain the necessary resources to provide for their children’s basic needs. While bankruptcy demands the sale of certain assets, the goal is to protect families from losing everything.
Child support and custody
Bankruptcy does not erase child support obligations. Parents who owe child support must continue making payments even after filing for Chapter 7. If a parent falls behind on child support payments, filing for bankruptcy will not discharge that debt. In fact, bankruptcy courts prioritize child support obligations over other debts. Failure to pay child support could result in consequences like wage garnishment or loss of custody, which may have a significant impact on your ability to care for your children.
Financial stability
While Chapter 7 can eliminate many unsecured debts, such as credit card debt or medical bills, it does not solve all financial challenges. Parents who file for bankruptcy may face difficulties finding new credit or securing housing. However, Chapter 7 can provide a fresh start, which may ultimately allow you to regain financial stability and better provide for your children.
If you are considering bankruptcy, it is important to keep in mind that your financial situation can directly impact your ability to provide for your child. The role of bankruptcy for a parent is to help manage debt so you can succeed as a caregiver.
