In some cases, bankruptcy may be the only option in order to regain financial stability again. While bankruptcy can be a stressful event on its own, children can certainly compact this stress as parents will undoubtedly be concerned as to how bankruptcy may affect their well-being.
It is undeniable that bankruptcy affects children, but a lot of this has to do with stress that is generated by the parent’s financial instabilities. In this case, this is often relieved once bankruptcy has been filed. Nevertheless, there are several ways to still protect and secure your children’s future before filing for bankruptcy.
Tip 1: Avoid Transferring Assets to a Child Before Filing.
The bankruptcy trustee will investigate any transfers to determine if you were trying to protect your assets before filing. Avoid hiding your own assets through your child and avoid transferring funds in an attempt to protect them. This will likely be viewed as suspicious and will not help your case.
Tip 2: Understand What Children’s Assets May be Protected and/or Exempt.
Some people may be unaware that some assets are excluded in bankruptcy proceedings. This includes the following:
Children’s Bank Accounts.
As long as you can prove your child’s bank account is theirs (for example, it was opened in their name), their bank account and any money that has been saved will be exempt from bankruptcy proceedings.
Children’s Trust Funds.
It is important to declare your children’s trust funds as an asset: do not try to hide money in a trust fund as this will look suspicious. However, since the money in a trust fund typically does not belong to you since you can’t withdraw it, the bankruptcy trustee may take this into consideration and leave the trust fund untouched.
Your Child’s Property.
Anything that your child has bought on their own (a car or a computer, for example) will be exempt from bankruptcy proceedings. You can look into proving these facts based on receipts.
If you are considering filing for bankruptcy, one of the first things you should do is contact a bankruptcy trustee. The team at Kevin Thatcher and Associates can help you navigate this difficult time to ensure that you get the best possible outcome. Contact us today for more information.