No. Under Section 178 of the Bankruptcy and Insolvency Act, child support and Section 7 extraordinary expenses (like joint daycare, braces, or tutoring) cannot be wiped out by filing for bankruptcy. The insolvent parent remains legally bound to pay their share, and arrears will survive the discharge.
When an ex-spouse files for bankruptcy, it often causes immense panic for the other parent. 👨 Co-parenting requires substantial financial cooperation, especially when it comes to shared costs like childcare, medical expenses, and extracurricular activities. Under Canadian family law, these specific shared costs are known as Section 7 extraordinary expenses, and they operate alongside standard monthly child support payments.
The BIA (Bankruptcy and Insolvency Act) is extremely protective of family support obligations. ⚔ The federal government mandates that a parent’s duty to support their child supersedes their duty to pay credit card companies, banks, or payday lenders. Whether you reside in Manitoba, British Columbia, or Quebec, a Licensed Insolvency Trustee cannot erase your ex-partner’s family law obligations, meaning your child’s financial safety net remains legally intact.
Step-by-Step Process: How Support Survives Bankruptcy
If your former partner declares bankruptcy, the way you collect shared expenses might temporarily shift, but their core liability does not disappear. 📝 It is important to understand how the family court system and the insolvency system interact to protect your rights as a co-parent. Generally, the process involves the following key steps.
Step 1: Identifying the Legal Obligation
First, ensure that the joint child care costs are formally documented. 🔍 For these expenses to be completely protected from bankruptcy, they must be outlined in a valid separation agreement or a formal family court order. Verbal agreements regarding who pays for hockey or daycare are incredibly difficult to enforce when a Licensed Insolvency Trustee steps in.
Step 2: The Ex-Partner Files for Bankruptcy
When they officially file, a Stay of Proceedings is enacted, which stops normal creditors from collecting. 💰 However, family support is exempt from this stay. The bankrupt parent must continue paying their ongoing monthly child support and their proportionate share of Section 7 expenses throughout the entire bankruptcy process.
Step 3: Calculating Surplus Income
During the bankruptcy, the insolvent parent’s income is heavily monitored by their trustee. 💵 Fortunately, the BIA allows the bankrupt parent to deduct child support and Section 7 payments from their net income before calculating what they owe to their unsecured creditors. This system actually incentivizes them to keep paying family support, as it lowers their bankruptcy penalties.
Step 4: Enforcement of Unpaid Arrears
If they refuse to pay their share of the daycare or medical costs, provincial enforcement agencies (like the FRO in Ontario, MEP in Alberta, or FMEP in BC) maintain their full authority. 🕘 They can continue to garnish the bankrupt parent’s wages, suspend their driver’s licence, and intercept their CRA tax refunds. When the bankruptcy ends, any accumulated arrears remain fully payable.
How Much Does it Cost to Enforce?
Navigating family law issues during an ex-spouse’s insolvency can involve some costs, but provincial enforcement agencies take on most of the heavy lifting. All figures are general estimates in CAD.
| Enforcement Step | Estimated Cost (CAD) | Description |
|---|---|---|
| Provincial Maintenance Enforcement | $0 (Free for Recipient) | Agencies like FRO or MEP enforce court-ordered Section 7 costs at no direct charge to you. |
| Drafting a Court Order | $1,500 – $3,500 | Lawyer fees to turn a verbal agreement into a binding court order so it survives bankruptcy. |
| Filing a Motion to Change | $2,500 – $5,000+ | If your ex tries to use family court to lower their support due to insolvency. |
| Unpaid Section 7 Arrears | Owed to You | The total amount your ex owes for joint costs remains 100% intact after their discharge. |
How Long Does the Process Take?
Child support and Section 7 obligations generally last until the child reaches the age of majority and completes their first post-secondary degree. 📅 The bankrupt parent’s insolvency process usually lasts 9 to 21 months. Throughout this timeline, their duty to contribute to daycare, orthodontics, or tuition remains constant and uninterrupted.
Frequently Asked Questions (FAQ)
Can a Consumer Proposal wipe out Section 7 expenses?
No. Just like a bankruptcy, a Consumer Proposal cannot reduce or eliminate court-ordered child support, spousal support, or Section 7 extraordinary expenses.
What if my ex genuinely cannot afford daycare anymore?
Bankruptcy itself does not change the amount they owe. If they truly cannot afford their share, they must apply to the family court for a Motion to Change to legally lower their obligation. Until a judge alters it, the debt accrues.
Will I get money from the bankruptcy estate for missed payments?
Yes, support arrears are considered a “preferred claim.” If the Licensed Insolvency Trustee seizes assets or distributes funds to creditors, you are legally entitled to receive payment for support arrears before the credit card companies see a dime.
Does bankruptcy clear spousal support?
No. Spousal support, just like child support, is protected under Section 178 of the BIA. Arrears and ongoing monthly payments survive the bankruptcy completely intact.
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