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When you’re a parent considering filing for bankruptcy in Raleigh, the welfare of your children probably weighs heavier than your financial situation. This is a legitimate concern, and the short answer is: You can still secure the future of your children even after filing for Chapter 7 or Chapter 13.
Children and Declaring Bankruptcy
To help give you peace of mind, we answer some of the most pertinent questions parents have when filing for bankruptcy.
- “Will my children lose their property?”
Everything in your household is considered your property, and this includes all items of clothing, toys, and pieces of furniture you’ve given or gifted your kids.
Now, if your child paid for his things with his own money and you can prove it (e.g. receipts), then these are considered his alone.
When you file for Chapter 7, you’re allowed to keep all exempt property. On the other hand, you are allowed to keep all of your property if you qualify for Chapter 13.
Even if your child’s things are not exempted, it’s very likely that you will be able to keep them. Bankruptcy trustees are usually just interested in high-value items and not used furniture such as beds, toys, or clothes.
- “How will a bankruptcy filing affect my children’s bank accounts?”
If your child has a bank account under the Uniform Transfers to Minors Act or the Uniform Gifts to Minors Acts, neither you nor bankruptcy trustees can legally withdraw from that account. It belongs to your child alone.
However, be aware that transferring money to a child’s bank account right before filing for bankruptcy can be viewed as suspicious. It’s a good idea to consult a Raleigh bankruptcy attorney ahead of filing to ensure that everything you do to your assets is above board.
- “How about child support payments?”
Neither Chapter 7 nor Chapter 13 bankruptcy will discharge child support obligations. In fact, child support arrears take priority over other creditors. This includes other debts that are considered support, such as educational or medical expenses.
In addition, your payments must be updated on post-filing child support dues before the bankruptcy court grants a discharge under Chapter 13. This means that your child will be taken care of even if you or your partner decide to file for bankruptcy.
- “Will my child be eligible for student loans?”
A child’s ability to take out student loans is typically not affected when their parents file for bankruptcy. They may still be eligible for Stafford and Pell loans to pay for college.
However, you might not be allowed to pay for PLUS loans if you have filed for bankruptcy in the last five years. In this case, your children may need to take out the prime loans themselves.
A Better Future is Possible After Declaring Bankruptcy
At Weik Law Office, we’ve assisted many parents and families filing for Chapter 13 or Chapter 7 bankruptcy in Raleigh, NC. We truly understand that this is not an easy decision to make. Yet in many cases, filing for bankruptcy means getting a second chance at a better future for you and your loved ones.
Call Weik Law Office today at 919-845-7877 for a free consultation, or set up a time to speak with one of our professionals.