How Bankruptcy Law Benefits Children

Article excerpt


While bipartisan bankruptcy reform legislation was being considered by Congress for nearly eight years, women and children patiently awaited long-overdue critical reforms to prevent deadbeat parents from abusing bankruptcy.

Under the guise of helping Hurricane Katrina victims, however, the new law's long-time opponents opportunistically claim it is "harsh" or "mean-spirited" and seek - as a last resort - to delay its going into effect today. Their effort would be to the detriment of some of its prime beneficiaries: children and their custodial parents.

Delaying bankruptcy reform makes absolutely no sense. For 28 years, I worked in San Francisco protecting children's interests by ensuring child support obligations were met. Far too often, my efforts were thwarted - and kids were hurt - by a parent filing for bankruptcy and then child support payments stopped for months and sometimes years while bankruptcy proceedings dragged on. This bankruptcy system's misplaced priorities and openings for abuse led Congress to enact a bipartisan overhaul of our bankruptcy law.

Now, those who never recognized the need for bankruptcy reform scheme to delay the new law on the speculative grounds this needed reform will adversely affect victims along the Gulf Coast. These opponents fail to acknowledge, for example, that the Justice Department has already announced it is utilizing the new law's inherent flexibility to ensure it is carried out in a way most favorable to the Gulf Coast victims. Moreover, these reform opponents conveniently ignore the enormous benefits conferred by the new law on custodial parents and children in need of financial support.

Let me provide some specifics. Unlike the old law, today's reform system provides employers of bankruptcy debtors' employers ordered to deduct support from the debtor's wages will continue sending support to families - even after the debtor files for bankruptcy protection. In addition, support creditors and agencies acting on their behalf now will be empowered to enforce orders requiring debtors to provide health and dental insurance and to collect support arrears from any tax refunds owed the debtors.

Those who filed for bankruptcy protection under the old system could obtain court approval of their bankruptcy repayment plans, but not pay any support during the three to five years the bankruptcy case was pending. And, as a final affront to decency, they could obtain a discharge of debts without paying a penny of support.

That system protected deadbeat parents at the expense of children. Previously, support debts were seventh in priority of payment. The new law makes child support the top priority.

Here's an actual example of how bankruptcy law operated - until today. A mother could not work because she had to provide care for her child who had Down's Syndrome. The father, $74,000 in arrears for in support, filed for bankruptcy in March 2003, never notified the child support agency, and served notice of the bankruptcy on his employer. …