As a parent, one of the things that may worry you is that your own financial struggles will impact your children. You always put your children first, but you’re concerned that a judge may not do the same during your bankruptcy.
The good news is that children’s items won’t always be affected by a bankruptcy. Some of the items that you may be concerned about, like your children’s clothing or toys, will normally be exempt from the process. However, in some instances, items will be able to be taken to repay debts when they aren’t exempt.
Your children’s items could be at risk during a bankruptcy
During a bankruptcy, you need to disclose all of your child’s items, just as you need to disclose your own. If your child has a college fund that is in your name, then that could be at risk of being taken during the bankruptcy. However, if that fund is set up in a custodial account, like a trust that holds the money until your child reaches the age of majority, then it may be protected.
It’s a smart choice to talk to your attorney if you have college funds saved up for your child. Similarly, if your child has a savings account that is in your name or that you have opened in a bank as a shared account, you’ll want to talk to your attorney about how to protect those funds.
Your child may be affected by a bankruptcy, depending on the assets they possess in your home. Your attorney can go over what to expect if you have children and have to go through a bankruptcy.