Child Support in Florida is an exemption???

[DivorceRuinedMe]

According to this link: http://www.bankruptcyinformation.com/FL_exemp.htm

Child support payments are an exempt asset. How does that work exactly? I'm confused. I always thought child support was INCOME and not an ASSET? Would that mean I don't count it as income? I am sooooo confused!

And can someone explain to me the wages portion of the exemption. I'm wondering what that means too. TIA~

[SamanthaJones]

Meaning a creditor cannot take child support income you receive.

It is 'exempt', in that respect. Child support may or may not be considered 'income' though, depending on myriad variables.

[DivorceRuinedMe]

It is 'exempt', in that respect. Child support may or may not be considered 'income' though, depending on myriad variables.

Now I'm thoroughly confused. Someone please explain this to me.

[DeadManCrawling]

Now I'm thoroughly confused. Someone please explain this to me.

I believe it means that if you receive child support it cannot be called an "Asset" or a source of income. It is protected by federal law.

If for instance, you receive (or pay) $500.00 per month in child support it is regarded as nonexistent for purposes of income or assets. A creditor cannot "garnish" child support, and you will either not include it in income calculations, or deduct it back out as exempt income in another schedule.

End result is, if you pay child support, BK won't relieve you of the obligation, If you receive child support, you will continue to receive it and no creditor can take any portion of it.

It is, after all, not really YOURS, but paid to cupport your child.

Hope that helps.

[DeadManCrawling]

Also, regarding the use of child support as INCOME in calculations, I have seen several New Law rulings that remove it completely from any consideration, meaning that it is exempt in every fashion.

HOWEVER, there are a few rulings that might affect it as income. For instance, one ruling stated that the "Totality of the circumstances" clause allowed it to be considered as income in certain cases. For instance, if the child's father is Mel Gibson, and he sends you 189,865 in support each month, they could exempt part of it and call it income, which would be payable to creditors.

I believe even then you would win in court, as that would put the court in a position of legislating law, as oppsed to interpreting. Child support is a specifically exempt source of household revenue, but not generated by you for income purposes.

Most of us will never pay/receive support in such numbers as to have it materially affect the Totality clause. However, if you pay it, there might be a good argument in a chapter 13 for high support payments that affect-and possibly reduce-your payment plan.

Best ask an attorney if you have one, or perhaps callt he trustees office. They can explain it in about 30 seconds I am sure.

[DivorceRuinedMe]

Also, regarding the use of child support as INCOME in calculations, I have seen several New Law rulings that remove it completely from any consideration, meaning that it is exempt in every fashion.

HOWEVER, there are a few rulings that might affect it as income. For instance, one ruling stated that the "Totality of the circumstances" clause allowed it to be considered as income in certain cases. For instance, if the child's father is Mel Gibson, and he sends you 189,865 in support each month, they could exempt part of it and call it income, which would be payable to creditors.

I believe even then you would win in court, as that would put the court in a position of legislating law, as oppsed to interpreting. Child support is a specifically exempt source of household revenue, but not generated by you for income purposes.

Most of us will never pay/receive support in such numbers as to have it materially affect the Totality clause. However, if you pay it, there might be a good argument in a chapter 13 for high support payments that affect-and possibly reduce-your payment plan.

Best ask an attorney if you have one, or perhaps callt he trustees office. They can explain it in about 30 seconds I am sure.

See, now this confuses me further b/c when I was filling out the Schedules I and J, it says to list the child support as income and it's counted in the means test.

[DeadManCrawling]

Ah, I think I have the answer:

http://www.bankruptcyorlando.com/chapter_7/index.html

Exemption of Child Support Payments
A prospective bankruptcy debtor asked whether child support payments received from an ex-spouse were protected after they were deposited in the debtor’s checking account. I have never researched this issue, but I suspect the money is not exempt in bankruptcy. Future child support payments are not part of the bankruptcy estate. Child support money paid prior to filing and commingled with other banking funds probably could be claimed by the bankruptcy trustee. Florida statutes do exempt proceeds from particular assets as well as the asset itself. For example, proceeds from an annuity if deposited in a bank account remain protected after they are paid to the beneficiary. Proceeds from the sale of homestead is protected under certain conditions. Exempt wages remain protected in wage accounts at banks. Otherwise, proceeds from exempt assets lose their protected status once they are distributed to the debtor and deposited in bank accounts.

If this attorney is accurate, then the key would be to make sure that you either have NO child support money in the back at the time of filing, or you will lose it to the BK trustee.

Future (post-petition) support should not be affected. I guess they figure ANY money in the account at time of filing, whether you claim it IS support, may or may not be, depending on many other factors. For instance, you receive a child support payment and the next day buy a computer. Did you use child support money or your own money? Difficult one to prove either way.

Just make sure you have none in your account, and that you file after it is all spent, before the next scheduled payment. That should cover it. You may want to call the trustee's office or an attorney JUST TO Make sure.