Many of our clients express their concerns about how filing for bankruptcy will impact not only their lives, but those around them. One concern we often hear our clients voice is how their bankruptcy will affect their children. Will they lose their home? Their automobiles? Their children’s college fund? Fortunately, more often than not, filing for bankruptcy will not impact any of these things and will provide you and your family with the opportunity to create a new financial future.
Typically, savings you have set aside before bankruptcy, such as college funds and retirement, are safe when you file for bankruptcy. It all depends on several factors: the type of bankruptcy you have filed for and the time period when you have put this money into savings. 529 savings accounts are protected from creditors during the bankruptcy process with a few exceptions.
For example, if you try to put a lump sum of money into a protected savings account right before you file for bankruptcy, those funds will likely not be protected. However, anything that’s been placed in a protected savings account up to 2 years prior of your filing will usually be safe. Any money that you’ve placed into a 529 savings account in those 2 years leading up to your bankruptcy is protected up to about $5,500. The same can be said for other savings that fall under the 529 category such as IRAs, 401(k)s, and pensions.
If you find yourself buried in debt with no way out, there is a way to build a brighter financial future. Call the bankruptcy attorneys at Craft Law Offices in Greenville, NC to set up a free consultation.