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If I File Bankruptcy Will It Affect My Kids?

Posted By Allmand Law Firm, PLLC || 13-Nov-2013

Filing Bankruptcy On Family Loans

As parents you try to do everything you can to ensure the well-being of your family. Sometimes it can be difficult to talk to your children about financial problems, especially when you can't afford to get them that special something they wanted. Other parents may not think their filing will affect their children, and in many cases, it doesn't.

It helps to review possible circumstances that may affect your children so you get a better idea on how you can move forward with your filing decision. Some parents hate the fact they are in financial distress, but they know the issue has an effect on how they provide for their family. Legitimate concerns debtors may have when considering bankruptcy may include:

  • Property intended for their children: will they lose it upon filing?

  • Financial accounts started for their children (educational accounts for example).

  • Will filing affect the child's ability to get into a private school?

  • Child support payments and what may happen to them?

  • Will their child be denied student loans for school?

Each circumstance is different depending on where you reside and what state laws allow. For many filers, their children can keep their property (clothes, toys, furniture, etc.) as long as the debtor qualifies depending on the chapter they file. Most financial accounts are protected or not considered part of the bankruptcy estate. Educational accounts may differ depend on when it was originally established and payments made into it.

Yet, if you move monies into such related accounts right before filing, the move could be seen as suspicious. If you owe child support you will still be required to make payments, but Chapter 13 bankruptcy can help you catch up on missed payments. To further understand your options discuss your concerns with a bankruptcy attorney.


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