Can a Parent’s Bankruptcy Affect Child Support in New Zealand?
When a parent faces financial hardship and considers filing for bankruptcy, one of the most pressing concerns is how it will impact their child support obligations. Many parents worry that declaring bankruptcy may allow them to avoid paying child support or that it will have a negative effect on the financial support their children receive. In this article, we will explore how a parent’s bankruptcy can affect child support payments under New Zealand family law.
Understanding Child Support Obligations in New Zealand
In New Zealand, child support is governed by the Child Support Act 1991. This legislation establishes the framework for assessing, collecting, and enforcing child support payments. The purpose of child support is to ensure that both parents contribute financially to their children’s upbringing, even if they are no longer in a relationship or living together.
The amount of child support a parent must pay is determined by a formula that takes into account factors such as the parents’ incomes, the number of children, and the living arrangements of the children. The Inland Revenue Department (IRD) is responsible for assessing and collecting child support payments.
The Impact of Bankruptcy on Child Support
When a parent declares bankruptcy, it can have significant implications for their financial obligations, including child support. However, it is essential to understand that bankruptcy does not automatically eliminate or reduce a parent’s child support responsibilities.
Under New Zealand law, child support is considered a priority debt. This means that even if a parent files for bankruptcy, they are still required to pay their ongoing child support obligations. The IRD has the power to enforce child support payments, regardless of a parent’s bankruptcy status.
As stated in the Child Support Act 1991, Section 165:
This provision clearly establishes that bankruptcy does not release a parent from their child support obligations under New Zealand family law.
Arrears and Bankruptcy
While ongoing child support payments must continue during and after bankruptcy, the treatment of child support arrears (overdue payments) may differ. In some cases, child support arrears that accrued before the bankruptcy filing may be included in the bankruptcy estate and subject to the same distribution process as other unsecured debts.
However, it is important to note that even if child support arrears are included in the bankruptcy, the IRD can still take enforcement action to recover those arrears after the bankruptcy has been discharged. This means that a parent cannot use bankruptcy as a way to permanently avoid paying outstanding child support debts.
Modifying Child Support During Bankruptcy
If a parent experiences a significant change in their financial circumstances due to bankruptcy, they may be able to apply for a modification of their child support obligations. The IRD has the authority to review and adjust child support assessments based on a parent’s current income and ability to pay.
To request a modification, the parent must provide evidence of their changed financial situation, such as proof of bankruptcy and updated income information. The IRD will then review the case and determine whether a modification is warranted. However, it is important to note that bankruptcy alone does not guarantee a reduction in child support payments.
Seeking Legal Advice
Navigating the complex interplay between bankruptcy and child support can be challenging. If you are considering filing for bankruptcy and have concerns about how it will affect your child support obligations, it is crucial to seek legal advice from an experienced family lawyer.
Naomi Cramer, a leading New Zealand family lawyer, is well-versed in handling cases involving bankruptcy and child support. With her extensive knowledge of New Zealand family law and a commitment to protecting the best interests of children, Naomi can provide you with the guidance and representation you need during this difficult time.
To learn more about how bankruptcy can impact child support, watch Naomi’s informative video on her YouTube channel, where she discusses this topic in detail.
Conclusion
In conclusion, while a parent’s bankruptcy can have significant financial implications, it does not automatically eliminate or reduce their child support obligations under New Zealand family law. Ongoing child support payments must continue during and after bankruptcy, and even child support arrears may still be enforceable by the IRD.
If you are facing bankruptcy and have concerns about your child support responsibilities, it is essential to consult with a knowledgeable family lawyer like Naomi Cramer. With her expertise in New Zealand family law, Naomi can help you understand your rights and obligations, explore your options, and ensure that your children’s financial needs are protected during this challenging time.
No solicitor-client relationship is created by this article. The author and owner shall not be liable for your reliance on the information contained in this article. Readers should obtain their own independent legal advice.
