One thing you knew might happen after your divorce was the risk of going through bankruptcy. Even though you have a good job, the financial stress of living on your own and raising your child has added up. You didn’t receive spousal support, and you’ve decided that the only way to handle your debt is through bankruptcy.
It’s important to you that you’re able to shield your child against the impact of the bankruptcy, though. Is there a way to do that?
To start with, you should know that property you purchased for your child may be considered your own during the bankruptcy. If your child is old enough to buy their own things or has purchased items with birthday money, then those items may be able to be excluded from the bankruptcy. Similarly, inheritances and gifts may also be protected. Typically, bank accounts in your child’s name will be protected.
As a minor, your child technically has few of their own items. The majority are considered your possessions, since you’re the parent. However, a bankruptcy trustee is unlikely to try to take your children’s things. Most of them, like children’s toys or clothing, have little in the way of resale value.
Overall, children’s items can normally be protected, but it’s worth talking to your attorney about how to minimize the impact of the bankruptcy on your child. Financially, your child may never notice the bankruptcy, especially if their personal possessions can be protected. For many parents, the outcome of the bankruptcy is better financial security, which benefits their children and creates a more stable lifestyle. Your attorney can talk to you more about how a bankruptcy may affect your child.