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What Possible Effects Will Bankruptcy Have On My Children?

Filing for bankruptcy in Illinois or Missouri will have a large impact on your life – as well as an impact on your children’s lives. Some of these effects can be negative, but some may be positive as well. Here are just a few possible effects of bankruptcy on your children and your children’s financial future:

• Child support payments won’t stop. While a number of different debts can be discharged or negotiated during an IL or MO bankruptcy, the government recognizes the importance of child support and has created a system where the child will not suffer because of a parent’s bankruptcy filing. You must continue paying for child support even if you petition for Chapter 7 liquidation bankruptcy, and child support payments will certainly be part of your repayment plan if you choose Chapter 13 bankruptcy.
• Your child’s assets may be affected by the bankruptcy if you do not take proper precautions. Assets shared between parents and children are often confusing and can be more so during a bankruptcy process. It is important to protect your child’s assets in case of bankruptcy – you can do this by using the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). Talk to a Missouri or Illinois lawyer for more information about protecting your child’s assets.
• College savings may be stalled. If you regularly contribute to a college fund for your child, those contributions may have to be interrupted as you go through the bankruptcy process. While the money in the fund will not be affected, ongoing contributions may not take priority over your current debts.

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