The total amount of debt that you are carrying might be way too high, despite all your efforts at repayment. You may have mulled over the thought of filing for personal bankruptcy to relieve yourself of your financial burden. However, doing so can affect not only your future but that of your children as well. After all, your children depend on you for financial support and stability.
Here are some steps you can take to ensure that your children won’t be affected if you file for personal bankruptcy. Here are some ways to protect their future.
1.) Don’t use any savings accounts that you opened under your child’s name to hide your assets.
As if your massive amount of debt hasn’t been giving you constant headaches already, perhaps your spouse decided to file for divorce, too. If so, you may have then transferred your assets to your child’s savings account so your spouse won’t have as much financial freedom once your divorce is finalized.
But what if your spouse hired a private investigator to look into your finances, especially if you suddenly filed for personal bankruptcy? The private investigator may check your child’s savings account amongst other things, and if they find out that you’ve moved your assets there, the account will be liquidated, leaving your child without any money to their name.
So, you should stop being selfish and simply give your spouse half of your assets in order to finalize your divorce and keep your child’s savings account from being raided.
2.) If your child isn’t living with you, settle all your remaining child support payments.
Even if you didn’t transfer any of your assets to your child’s savings account, you might have neglected to pay for child support in the wake of divorce proceedings with your former spouse. Unfortunately, filing for personal bankruptcy doesn’t mean that you can get away with not fulfilling your child support obligations. Those aren’t dischargeable. In fact, you should pay all your remaining support obligations first, and then continue paying on schedule until your child can make money by themselves.
3.) Put some money in your child’s 529 plan more than 365 days before filing for bankruptcy.
The balance of your child’s savings account might not be enough to fund their college education, so if you opened a 529 plan under their name and regularly deposit a certain portion of money, you should stop depositing at least 365 days before filing for personal bankruptcy so that your money is exempt from seizure by your creditors.
More than 700,000 Americans filed for personal bankruptcy in court in 2016 and 2017, which means that filing bankruptcy is becoming increasingly acceptable. It doesn’t mean, though, that you should file for personal bankruptcy whenever you feel like it, especially if you have a child whose future depends on your long-term financial stability. But if you want to file for personal bankruptcy to relieve yourself of debt, after discussing it with a lawyer, you should take the steps we outline in this article to protect your child’s future so that they don’t have to bear the brunt of your financial burden.