Q: Will Alabama drop any interest on child support arrears when Chapter 13 is filed?
My husband and I are considering filing Chapter 13 in order to handle his child support arrears. The child is now over 19. The interest is more than double the actual arrears. Without the interest, we'll be able to pay it off in 60 months; however, when calculating the arrears and interest the payment would be unmanageable. How does Alabama normally handle this? Will the interest be dropped?
A: Consult your bankruptcy attorney but because it is attached to a domestic support obligation, it likely will not be discharged.
A: You can file the Chapter 13 and negotiate with the Child Support agency to either reduce the interest, or at least get them to agree to let you place the interest outside the Plan, due after you get the ch 13 discharge. The latter option (putting interest outside the plan) is usually what happens, so the Debtor can present a feasible plan within the 60 month maximum period the plan can run. If the child support is solely due to the mother ( or guardian or father) of the child, then that person as Obligee can agree to a reduction in the interest on the support. If the support is soley due to the Child support agency then the obligee of the support order is not part of the negotiating process ( this is in situations where child support is solely collecting on a medicaid payment for the birth of a child, or subrogation on paid welfare benefits to the parent who has / had custody of the child.
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