If your ex (and the children) aren't receiving public assistance, then, yes you can take it out of probation and make it a direct pay, and/or she can agree to zero out arrears, and/or she can agree to accept a different amount of support than the child support guidelines would require (but you must attach the guidelines and the waiver must be "knowing"). Consent order should be less than an hour of legal time to have an attorney draft up.
If she's getting public assistance, it's not up to her, it's up to the Board of Social Services.
Bankruptcy has no effect on arrears and doesn't control a court's decision as to your financial situation, although judges will generally consider it as evidence (not conclusive proof) that you've had a change in circumstances.
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I agree with counsel. So long as public benefits are not involved, you can work this out with your wife.
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The other answers are correct and you should get her to enter into the consent order closing out the probation account and make sure is removes all arrears. You can always close the probation account, however, the issue with public assistance is that if she is receiving benefits, thus your children are receiving benefits from the state, the state is entitled to have those benefits repaid by you. New Jersey allows a court to impute income to a person that the court believes is under employed or when that person has not shown a significant change in circumstances to allow the lower income to be used.
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