As a parent, you want what’s best for your children. Therefore, if you’re considering filing for bankruptcy, it’s only natural for you to wonder how this might affect them. In this article, we examine the consequences of filing for bankruptcy as a parent.
It can be difficult to keep up with child support payments when you are experiencing financial difficulties. Unfortunately, however, child support is not a debt that can be discharged in bankruptcy. In fact, when your assets are liquidated in a chapter 7 bankruptcy case, a portion of the proceeds go towards child support payments. In chapter 13 bankruptcy, child support payments are incorporated into your repayment plan.
Of course, bankruptcy also provides relief from other debts, and this can free up money to put toward your child support payments. So, ultimately, bankruptcy can actually be beneficial to any children for whom you provide child support.
Bankruptcy can, unfortunately, affect the amount of money you have available to make monthly contributions to your children’s education fund. In most bankruptcy cases, the bankruptcy court will only allow you to allocate funds on necessary expenses. These include things like rent payments, medical expenses, and food. Although your children’s education is important, the court doesn’t consider it a necessary expense. So, if you file for bankruptcy, you may have to temporarily put education payments on the backburner. However, there are some circumstances under which these payments may be permitted, but you’ll need to consult with an experienced Milwaukee bankruptcy attorney to see if this might apply to your situation.
Children’s Savings Accounts
When you file for chapter 7 or chapter 13 bankruptcy, you must disclose all your assets, debts, and liabilities to the bankruptcy court. However, the court usually doesn’t make distinctions between your property and the property of your minor children. Therefore, in order to save your children’s assets (such as savings accounts) from seizure in a bankruptcy filing, you must structure them in a way that will enable you to prove that they are the sole property of your children. One way to accomplish this is to open your children’s bank accounts under either the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). However, if you are seriously contemplating bankruptcy or have already filed for bankruptcy, you shouldn’t take any actions related to your children’s savings accounts without first consulting with an experienced Milwaukee bankruptcy attorney.
Contact a Milwaukee Bankruptcy Lawyer
If you need a fresh financial start in Milwaukee, you should contact an experienced Milwaukee bankruptcy lawyer as soon as possible. At Hanson & Payne, our experienced bankruptcy attorneys offer bankruptcy and debt negotiation services to individuals throughout southeast Wisconsin. Therefore, if you’re ready to explore your options with an experienced bankruptcy professional, please contact our office today to schedule a free consultation.