The world has evolved and advanced so much in the last several years that a college education is almost a necessity to starting a lucrative career. Unfortunately, the cost of obtaining a college degree is not cheap and the costs are growing yearly. Reports over the last few years reveal that tuition costs have risen between 4% and 6% annually among public institutions and private ones as well. Many parents have started various saving plans to assist their children with the financial burden of going to school. With the sudden change in the economy, many parents are struggling to maintain their own financial responsibilities let alone save for their children’s college funds. This has brought out questions to many Minnesota bankruptcy attorneys: does bankruptcy affect your kid’s college funds?
Bankruptcy can access most funds
Do not be deceived, just because a person is saving money for the purpose of sending their child to college does not mean the creditors and courts will ignore those funds. According to Minneapolis bankruptcy law any funds that are listed in the name of the person filing bankruptcy can be used to pay off debts. This includes checking accounts, saving accounts, CD’s, home equity and even college funds.
The one exception
Fortunately for the kids, there is a way to prevent creditors from tapping into the fund. There are two different acts designed for this exact kind of situation. The first is called the Uniform Gift to Minors Act and the other is called the Uniform Transfers to Minors Act. Using one of these acts, money can be moved from a typical savings plan and placed into a new fund that is under the management of a parent. This new fund is not accessible by the parent in any manner. The parent merely decides where the money will be held until the minor reaches the age of 18. When the child reaches 18 the funds can be withdrawn to cover the costs of college.
Contacting a Minnesota bankruptcy attorney is a wise decision for anyone that has found themselves fighting to keep afloat with their finances. There are many different rules and situations covered by the Minneapolis bankruptcy law that can cost people a lot of money if they do not know how the law applies to them. Getting advice from an experienced attorney will save people time, money, and most likely some heartache.
{ 0 comments }