Will Filing Bankruptcy Affect My Children?

The decision to file bankruptcy is a serious one that should only be undertaken after carefully considering all the implications. A key factor that many debtors are concerned about is the impact of a bankruptcy filing on the lives of their children. If you are considering talking with an Akron bankruptcy attorney, here are some things you’ll want to keep in mind when it comes to bankruptcy and your children.

Your Child’s Property May or May Not Be Exempt

If you are wondering whether a bankruptcy means your child will have to give up his or her property, the answer is that it depends. Technically, you own all the property in your house—including property that you are “lending” or have “gifted” to your children. As such, in an Akron chapter 7 bankruptcy proceeding, your child’s property is subject to being seized and sold to satisfy creditors.

Fortunately, there are a couple of huge exceptions here, and they almost always mean that your child’s property is left alone. The first exception is that you are able to exempt from the bankruptcy estate certain household furnishings and clothing. This exemption almost always covers anything in your child’s room.

Second, keep in mind that the bankruptcy trustee will only be interested in assets that can be sold for a decent amount of money. Most of the furniture, clothing, and other items that a child owns will not be valuable enough to be worth the trustee’s time.

Finally, if your children are old enough to have a job and have purchased items for themselves, those items will not be a part of the bankruptcy estate. Of course, your children may need to prove that they paid for certain items, so it is usually a good idea to have them start saving receipts when they begin purchasing major items for themselves.

Other Considerations

Other things to keep in mind include your child’s ability to take out school loans, your child’s bank accounts, child support payments, and the matter of private tuition. Most of these won’t be a consideration in the majority if Akron chapter 7 proceedings.

Your child will still be able to apply for and obtain school loans. Further, his or her 529 educational accounts will be exempted from the bankruptcy estate, as will the contents of his or her bank accounts (under certain circumstances). Finally, keep in mind that child support payments will continue to be due, even if the person paying them is in bankruptcy.

As always, all the information in this blog depends on certain factors, and every bankruptcy is different. So, it’s a good idea to make sure to talk with your Akron bankruptcy attorney before you file for bankruptcy.