Can filing bankruptcy affect your children

Filing bankruptcy is certainly not a nice experience. You are indeed in a tight and stressful situation while you are in bankruptcy. But bankruptcy affects not only you but also your family especially your children. Have you ever wondered how bankruptcy can cast its dark shadow over your kids’ life? Read on if you are not too sure about the right facts.

Bankruptcy can possibly affect your children in two ways:

Firstly, if your creditor is paying the school or college fees of your kid then it can be a source of problem. This is because filing bankruptcy can force the creditor to stop funding for your child’s education. When you file bankruptcy, your creditors, in collaboration with the court, try to restrict your expenditure. In the process the money that goes towards your child’s education may be curtailed. You should be aware that the priority of the court at this point of time is to guide you to pay back your debt. While the court will consider expenses for basic needs such as food and housing, your child’s education may not be considered as something of primary importance.

Secondly, your child’s assets could be in peril if you file bankruptcy. Why should it be? Well, you might have opened a savings account for your kid under your name or the accounts are not opened under Uniform Gifts to Minors Act or Uniform Transfers to Minors Act. In the above mentioned cases, the account would be considered as your own asset and not the child’s. Therefore, it won’t be exempted from bankruptcy.

However, you can take heart from the fact that the court would protect your child against bankruptcy consequences. Child support issues are treated by the court with utmost importance. In fact, child support obligations are not qualified for discharge of debt in bankruptcy. Even if you file for Chapter 7 bankruptcy, child support issues will be kept in mind while liquidating your assets. Nonetheless, payments for your child’s education, as stated before, can be a problem.

You should be aware about the effect of bankruptcy on your child’s future and the complications that may arise. Therefore, you should discuss with a bankruptcy attorney about the issue before taking a decision.