Bankruptcy

DCSS-POL-06-4 v.2

 

  1. OVERVIEW
  1. The purpose of this policy is to provide staff and members of the public a working knowledge of how bankruptcy impacts the enforcement of a child support order. When an noncustodial parent (NCP) files for Bankruptcy, child support arrears remain as non-dischargeable debt and must still be paid.
  1. APPLICABILITY
  1. This policy applies to all Arizona IV-D program staff performing Title IV-D services.
  1. POLICY
  1. The Division of Child Support Services (DCSS) will only take actions allowed by federal law on a case in which there is an open bankruptcy. 
  1. CRITERIA
  1. Child support obligations, arrears and fees are not discharged under any chapter of bankruptcy, including Chapter 7or Chapter 13.
  2. Permissible actions or proceedings available to the DCSS on a case with an open bankruptcy include:
  1. Initiating a paternity action for the establishment of paternity.
  2. Establishing a support order and past support without a payment on arrears (unless it is a Chapter 7 bankruptcy, in which case a payment on arrears is acceptable).
  3. Modifying a child support order.
  4. Limited enforcement actions
  5. Permissible and non-permissible enforcement actions on a case with open bankruptcy
  1. Enforcement actions that are permissible:
  1. Passport denial requests
  2. Income Withholding Orders (IWOs)
  3. Credit Reporting to credit agencies
  4. National Medical Support Notices
  5. Federal tax intercept (IRS)
  6. State tax intercept (DOR)
  7. Enforcement actions that are not permissible:
  8. Lottery intercepts in Chapter 13 bankruptcy cases
  9. Advanced collection techniques (ACT vendor)
  10. Asset seizures, both automatic and manual
  11. Administrative liens
  12. Federal Administrative Offsets
  13. Recording of judgments and liens
  14. Requestinga judgment on arrears
  15. Limited Income Withholding Orders (LIWOs)
  16. Contempt
  17. Collection calls or letters

When a case has an open bankruptcy, actions available to the DCSS are limited to establishing paternity, establishing or modifying a support order and enforcement actions as detailed in the above list of criteria.

  1. PROCEDURE
  1. This policy is supported by staff procedures, which identify how action related to this policy will be conducted, including responsibilities, time frames, and required actions.
  1. AUTHORITY
Federal Authority

U.S.C. Public Law 109-8

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 

11 U.S.C. § 101(14A)

Definitions - Term "Domestic support obligation"

11 U.S.C. § 362

Automatic stay

11 U.S.C. § 362(b)

Exceptions to automatic stay

11 U.S.C. § 523(a)(5)

Exceptions to discharge
O.C.S.E. AT-06-05 Policy Questions and Responses to Miscellaneous Issues regarding Ch
O.C.S.E. AT-81-20 Child Support Obligations Not Discharged by Bankruptcy
O.C.S.E. AT-96-05 Collection of Child Support by the IRS through Federal Income Tax Refunds Offset, 1996
O.C.S.E. DCL-00-78 Letter to Colleague - Processing Bankrupties
O.C.S.E. IM-05-05 New Federal Bankruptcy Law Contains Child Support Provisions
O.C.S.E. PIQ-07-04 Additional Information Regarding Enforcing Child Support when the Obligor is in Bankruptcy

Return to beginning of Bankruptcy Policy

Policy Revision Date: 2/17/2023
Policy Review Date: 12/03/2022

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