Will My Bankruptcy Affect My Child's 529 College Saving Plan?
When filing for bankruptcy, parents may worry about the impact it will have on their child's 529 college savings plan. Even though it is a common concern, there are steps that can be taken to ensure your child’s educational dreams remain intact.
The biggest factor in determining whether or not a parent’s bankruptcy will affect their child’s 529 college savings plan is the type of bankruptcy they file. If you file Chapter 7 or Chapter 11 bankruptcy, then there is usually no impact on your child's 529 plan. However, if you file Chapter 13, then creditors can go after any assets that were acquired during the three years prior to filing for bankruptcy. This includes funds from a 529 college savings account set aside for your child’s education.
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