Student Loans

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Paying off Student Loan Debt is about to get easier for 5 Million Borrowers

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The Obama administration has rolled out two new provisions that will give 5 million more college graduates the ability to enroll in income-based repayment plans and make it harder for schools to force students to use prepaid debit cards.

Here’s how it works…

More students can apply for income-based repayment plans.

The Education Department officially unveiled its long-awaited expansion of the income-based repayment program, Pay As You Earn (PAYE), which nearly four million federal direct loan borrowers are currently enrolled.   The new plan, which takes effect this December, is called REPAYE (the “RE” stands for “revised”) and will allow 5 million more federal student loan borrowers to enroll.

The new plan accomplishes this by allowing borrowers to sign up regardless of when they borrowed their loans or their debt-to-income ratio. The existing PAYE model is only available to people who borrowed after 2007 and whose debt greatly outweighs their income. Those enrolled in the REPAYE plan can have their payments capped at 10% of their income. Allowing the additional 5 million borrowers to qualify for the program will cost the federal government an estimated $15.4 billion over the next 10 years.

No more deceitful debit card agreements.

The government has been trying to crack down on prepaid debit cards on college campuses.  Thanks to the 2009 CARD Act, which stops banks from marketing credit cards on campuses, college credit card agreements have dropped by more than half between 2009 and 2013.

To get around this, the banks shifted their focus from credit cards to prepaid debit cards.  Today, 40% of students attend schools that have agreements with banks to market student debit and prepaid cards on campus, according to a report by the Government Accountability Office. These cards are known to come with high overdraft fees and other hidden fees.

The new Department of Education rule requires schools to allow students to choose how to receive their student aid refunds. They can no longer be forced or urged to open a certain kind of account to get that money.  The rule says schools have to make sure fees are not “excessive and confusing.”

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

Discharging Student Loans in Bankruptcy May Soon Become Easier

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A report by the Department of Education has identified solutions it believes will lead to better outcomes for those struggling with student loan debt.  The biggest relief being extended to borrowers is the ability to discharge private student loans in bankruptcy.   The Obama administration’s proposal will also extend enhanced borrower protections found in federal loans to private loans.

It seems the Department of Education is ready to strike a balance between collecting on their loans and removing unreasonable hardships on struggling borrowers.   “Other types of consumer debt – mortgages, credit cards and auto loans – are dischargeable in bankruptcy, and student loans shouldn’t be an exception,” said Under Secretary of Education, Ted Mitchell.

“We feel strongly that while there are protections built into the (Federal) Direct Loan program that are important for borrowers, there aren’t parallel protections for borrowers in the private student loan market,” Mitchell said. “We think it’s important to do what we can to create those protections, and we think starting with a (new) bankruptcy provision is the way to go.”

The Department of Education is also reconsidering what constitutes as “undue hardship,” which could also affect Federal student loans.  Currently, undue hardship is the only out for borrowers trying to get their student loans discharged in bankruptcy.  Earlier this year, the Obama administration indicated that it would broaden the definition to increase the likelihood of more discharges.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Bankruptcy Case Could Unchain Americans from Student Loan Debt

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An unemployed 65-year-old man, acting as his own attorney, has spent three years appealing his way to the Boston federal court that is now hearing his case.  Not only will a win relieve him of hundreds of thousands of dollars in student loan debt, the verdict could fundamentally change the way U.S. bankruptcy courts handle borrowers who cannot repay their student loans.

While most consumer debt is discharged in bankruptcy, federal rules make it nearly impossible for borrowers to eliminate their student loan debt.  In the 1970’s, Congress added new rules to the law that excluded most student debt from that relief.  Anyone trying to discharge student loan debt in bankruptcy must prove that repaying it would constitute an “undue hardship.”  However, lawmakers never defined an undue hardship, so it is left to the courts to determine just how destitute a borrower needs to be to qualify for relief.

The appeal seems to have prompted the First Circuit Court of Appeals to reconsider the definition of hardship.  A judgment in favor of the debtor could have a significant impact on other courts, which have not looked at this issue in some time.  This case could mark the first time a federal court weighs in on modifying the standards in a decade.

Federal student loan debt stands at $1.2 trillion, making it the largest source of consumer debt outside of mortgages.  This figure is expected to double in the next 10 years, with the rising costs of higher education. Some 7.5 million student debtors are severely behind in paying the government back.

From 2001 through 2007, the debtor in this case took out several Parent PLUS student loans (federal debt parents can use to finance their kids’ education) to send his three children to college. After accruing interest, the total debt ballooned to $246,500. In 2002, he lost his job as president of a manufacturing company when it closed its doors to move overseas.

He has been unable to find work in the last 13 years, he said, because he is viewed as too old for executive positions and overqualified for lower-level jobs. He lives on the salary his wife makes as a teacher’s aide, less than $15,000 in annual income.  Their retirement savings has been drained and their house just went into foreclosure.  Even if he were able to find a job paying $50,000 per year until he turned 77, he calculated, the balance of his loans would still grow to $500,000.

Consumer advocates agree, most of debt that could be discharged in bankruptcy is not collectible because the bankrupt borrower cannot pay it back.  The idea of bankruptcy is to give consumers relief from overwhelming debt and a fresh financial start.  If a debtor is never going to be able to repay their debts, why are we not giving them relief?

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Debt Relief, Student Loans

Widespread Servicing Failures Reported by Student Loan Borrowers

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The Consumer Financial Protection Bureau (CFPB) has released a report outlining the widespread servicing failures reported by both federal and private student loan borrowers.  Consumers claim loan servicers’ incompetent practices create obstacles to repayment, raise costs, cause distress, and contribute to borrowers going into default.

Student loans make up the nation’s second largest consumer debt market, which has grown rapidly in the last decade. The total volume of outstanding student loans has more than doubled, increasing to more than $1.2 trillion today. One in four student loan borrowers are currently in default or struggling to stay current on their loans, despite the availability of income-driven repayment options for the majority of borrowers.

Loan servicers are a critical link between borrowers and lenders. They manage borrowers’ accounts, process monthly payments, and communicate directly with borrowers. When facing unemployment or other financial hardship, borrowers must contact student loan servicers to enroll in alternative repayment plans, obtain deferments or forbearances, or request a modification of loan terms.  Consumers have reported problems with servicers, such as them losing paperwork and misapplying payments.  Borrowers claim that when errors like this arise, it’s difficult to have them corrected.

The Bureau has made it its mission to take action against these student loan servicing companies that are engaging in illegal practices. To address these harmful servicing practices, The Joint Statement of Principles includes the following recommendations:

  • Create consistent, industry-wide standards for the entire servicing market.
  • Hold servicers accountable.
  • Provide access to clear, timely information.
  • Improve publicly available data.

 

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Related Resources:

http://www.consumerfinance.gov/newsroom/cfpb-concerned-about-widespread-servicing-failures-reported-by-student-loan-borrowers/

http://files.consumerfinance.gov/f/201509_cfpb_student-loan-servicing-report.pdf

Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

BEWARE: The Dangers of Private Student Loans

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Many student loan borrowers accept the financial aid packages placed before them by their school’s financial advisors.  These funds can include numerous private loans covering what federal loans do not.  What many borrowers do not realize is that these private loans come with higher interest rates and few relief options if they cannot afford the payments upon graduation.  Parents and relatives who co-sign on these loans are also unaware of the consequences.

That’s why when a borrower runs into financial trouble; the problem can quickly become a family affair, leaving parents and grandparents on the hook if they co-signed on these loans.   Many co-signers incorrectly think of “co-signing” as the equivalent of providing a reference.  They could not be more wrong.  In fact, the loan is just as much the co-signers loan as it is the borrowers.   Many times, they do not realize the loan is their loan until they try to refinance their mortgage only to have the lender refuse the request because they have too much debt.  Unlike federal loans, which typically have the protections of income-based repayment plans and forgiveness programs, private loan borrowers are at the mercy of their lenders.

Private loans make up only an estimated 7 to 10 percent of the $1.27 trillion student loan debt.  But with the cost of college increasing, borrowers are left to rely more on these loans as federal loans are not enough to cover all expenses.   For the past three years, the Consumer Financial Protection Bureau has been collecting consumer complaints on private loans and has found that borrowers are hitting road blocks when they ask their lenders for help.  This should serve as a flashing “buyer beware” sign for prospective borrowers and co-signers.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

Student Loan System Stacked Against Borrowers

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In a recent report issued by the Consumer Financial Protection Bureau, student loan borrowers are experiencing high levels of distress compared with borrowers with other types of consumer debt.  Even with the economy and job market improving, more than one in four student loan borrowers are delinquent or in default on their debt obligations.

Approximately 41 million Americans owe $1.2 trillion in student loan debt.  The median debt burden among borrowers was $20,000 in 2014, up from $13,000 in 2007.

Among the biggest loan service providers are Navient, Great Lakes and Discover Banks.  These companies manage borrowers’ accounts, process payments and enroll them in alternative repayment plans- including those based on a fixed share of the borrowers’ income.

With no federal standards governing these organizations, the student loan servicers have great leeway in their practices.  What’s worse is that borrowers are not allowed to choose their servicers.  So if problems occur, the student loan borrower cannot take their business elsewhere.

One of the common borrower complaints among the roughly 1,200 people surveyed was that servicers simply failed to follow instructions.  Borrowers hoping to reduce the cost and length of their repayment period often asked servicers to apply payments to their higher-cost loans, first.  In numerous incidences, these requests were ignored.

Improper levying of late fees, losing paperwork and making repeated requests for documentation were other practices cited.  Perhaps the biggest complaint by borrowers was the failure of student loan servicers to advise them of all their repayment options.  In many cases, it meant the borrowers not knowing they were eligible for student loan debt relief.

These relief options include: repayment plans for federal loans based on a borrower’s income and family size or debt forgiveness programs for borrowers who work in public service.  Members in the military also have the right to lower interest rates while on active duty.

A recent government report revealed that 51 percent of student loan borrowers nationwide are eligible for income-based repayment plans, but only 15 percent are enrolled.  Rather than offer these programs, servicers are quick to recommend forbearance, which stops payments temporarily- but not the interest from piling on. This is an expensive alternative. Some private student loan servicers charge a $150 fee to put an account in forbearance.

This has been compared to the aftermath of the housing crisis, where mortgage servicing companies made it harder for homeowners trying to repay or renegotiate their loans. Borrowers and tax payers deserve better.  Repaying student loans is challenging enough without servicers adding to the burden with incompetence and questionable practices.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

 

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

New Push on Bankruptcy Protections for Student Loan Debt Relief

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Borrowers struggling with student loan debt may be getting some much needed relief.  The Obama administration has reached out to Congress in an attempt to make it easier for some student loan borrowers to discharge their debt through bankruptcy.  A recent report released by the U.S. Department of Education outlined a proposal for improving the nation’s student loan system, which will require congressional action.

The most significant change is for Congress to ease the process for private student loan borrowers seeking to have their loans discharged through bankruptcy.  The administration is proposing that Congress re-enact a 2005 law, which allowed bankruptcy filers to discharge their private student loan debt.

For consumer advocates and some congressional Democrats, this has been a long time coming, but this is the first time the Obama administration has supported a revision to the rules governing how student loans are processed in bankruptcy.

According to Under Secretary of Education Ted Mitchell, “All other types of consumer debt are dischargeable in bankruptcy and we think private student loans are a glaring exception.”  “We think it’s important to do what we can to create those protections, and we think starting with a bankruptcy provision is the way to go,” he continued.

The administration’s proposal would extend borrower protections to private student loans that do not offer flexible repayment plans like those granted to federal loan borrowers.  The report states that “there are strong grounds for maintaining different standards for federal student loans.”

Federal student loans are not underwritten and typically have generous terms and protections.  Monthly payments can often be limited based on income.  By contrast, private student loans tend to lack those protections and can leave borrowers in financial distress with few options.

Along with changes to federal bankruptcy laws, the administration has proposed adding other consumer protections to private student loans, such as barring private lenders from automatically declaring a loan in default when a co-signer dies.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Why Millennials and Gen-Xers are faced with Filing for Bankruptcy

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A recent Bankrate.com survey found that roughly 56% of millennials with current or past student loans have postponed major life events because of overwhelming debt.  While many Millennials and Gen-Xers have more debts than assets, it is important to determine whether bankruptcy is the right option.  Free advice is available through the National Foundation for Credit Counseling and consumers can consult with a bankruptcy attorney oftentimes free of charge for an initial consultation to discuss their options.

Consumers are advised to seek the advice of a credit counselor or bankruptcy attorney before they file for Chapter 7 or Chapter 13.  Filing for Chapter 7 means the unsecured debt (credit cards, medical bills, utility bills, etc.) will be discharged while filing for Chapter 13 requires consumers pay their debt for a set number of years before having a certain portion of that debt discharged.

Since changes to the bankruptcy laws in 2005, consumers now have a harder time filing for Chapter 7 and certain loans, like private and government-backed student loans are no longer dischargeable.  Consumers who file for Chapter 13 are typically on a five-year plan, having to pay back a portion of their debt.  Depending on the debtor’s income and living expenses, monthly payments can be as low as $50 a month.

Consumers should be prepared to provide documents such as paycheck stubs, tax returns and bank statements to their attorney. To receive the best interest rates possible, consumers who file for bankruptcy are advised to wait 24 months after their bankruptcy has been discharged, which means it was accepted by the bankruptcy court, to access credit again from credit card companies and some mortgage and auto loan lenders.

Rebuilding your credit score slowly is the best course of action. Examine your current household expenses, come up with a realistic budget and seek entry-level credit options to help establish a new record of timely payments.  Monitor your credit score regularly.  You can begin the process by getting a copy of your credit report from each of the three major credit bureaus: Equifax, Experian and Transunion. You can download a copy of your free credit report at www.annualcreditreport.com. As your credit improves, take advantage of opportunities to qualify for better credit terms- and always remember when it comes to credit cards, keep your balance well below the assigned credit limit.

Click here to read more on the story.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Related Resources:

http://www.cheatsheet.com/money-career/what-young-people-cant-afford-because-of-student-loan-debt.html/?a=viewall

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Where the 2016 Candidates Stand on the Student Loan Debt Crisis

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Student loan debt is playing a prominent role in the presidential election this year.  Almost every one of the 20 candidates running for president has been forced to address the issue of college affordability in some way.  Candidates are unveiling their plans to reform higher education and help the approximately 40 million Americans struggling with student loan debt that has ballooned to $1.2 trillion. The candidates’ plans range from debt-free college to matching students with private investors to finance their tuition.

Here is where a some of the front-runners stand on the issue:

Get students through school faster, expand access to alternative higher education programs and give colleges an incentive to drive down costs and improve quality. “I think the focus ought to be on how we reform higher education so that full time students can get a four-year degree in four years.” Jeb Bush, Republican (Former Governor of Florida)

Use government intervention to ease the student debt burden. “We need to transform how much higher education costs- and how those costs get paid.” Hillary Clinton, Democrat (Former U.S. Secretary of State)

Stop the government from profiting off student loans. “I think it’s terrible that one of the only profit centers we [the government] have is student loans.” Donald Trump, Republican (Businessman)

Expand income-based repayment, allow private investors to partner with students to cover the cost of tuition in exchange for a chunk of their incomes. “Colleges know the federal government will continue lending students as much as they need in federally guaranteed loans.” Marco Rubio, Republican (U.S. Senator from Florida)

Unofficial: Increase in competition in the education and student loan space. “The more choice we have- whether in K-12 or in higher education – the better choices and chances young people have.” Carly Fiorina, Republican (Former CEO of Hewlett-Packard)

Allow students to refinance their loans, but also roll back government involvement in education. “For too many, college is where students discover mountains of debt- but not a lifelong career.” Mike Huckabee, Republican (Former Governor of Arkansas)

Debt-free college is “wrong,” but he wants to reform the student loan system to focus more on low-income borrowers.  “If college graduates are going to reap the greater economic rewards…then it seems fair for them to support the cost of the education they’re receiving.” Chris Christie, Republican (Governor of New Jersey)

Debt-free college. “Right now there aren’t even the pathways for families going to college without a huge debt.  It’s only a question of how big the mountain will be.” Martin O’Malley, Democrat (Former Governor of Maryland)

Unofficial: Require families to rely more on personal responsibility, instead of student loans to get through school. “Should we be looking at ways to reduce student debt? Yes, but not if it’s going to drive up the (national) debt.” Ben Carson, Republican (Neurosurgeon)

President Obama is also partially responsible for student debt’s prevalence on the campaign trail.  His administration drew more attention to the issue than most with proposals for free community college and a publicized crackdown on for-profit colleges.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Student Loans, Timothy Kingcade Posts

The Affects Bankruptcy has on Children

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Filing for bankruptcy can be a challenging time, especially for those who have children.  However, sometimes it is the only option. Below is a detailed look at the impact bankruptcy can have on children.

Child’s Property Status

Any property you have purchased for your child, including: clothing, furniture, toys, books, etc. is considered your property in a bankruptcy case. However, it will not be included in your bankruptcy estate if you are able to prove that the property was purchased with your child’s income. This would apply if your child received funds from employment or other form of income. Receipts from your child’s bank account are also helpful in excluding the property from your bankruptcy estate.

Child Support Income

In the State of Florida, child support income is exempt in bankruptcy, if it has been saved in a bank account. Again, receipts are important to prove that the money in the account is indeed child support income.

Child’s Financial Assets

Any bank accounts or college savings accounts that are in your child’s name are exempt in bankruptcy.   These include custodial bank accounts and 529 college savings accounts.  Any deposit made to the account less than 365 days before filing bankruptcy may be seized by the bankruptcy trustee and used to repay creditors.  Fortunately, any deposits made between 365 to 720 days or more prior to filing bankruptcy are exempt.

School Tuition and College Student Loans

$1,875 in educational expenses is usually allowed for minor children of bankruptcy filers. While college-aged children will still be able to take out  student loans, you will be excluded from taking out loans on their behalf, after filing for bankruptcy. It is always best to speak with your bankruptcy attorney to explore how trustees view tuition payments in your area.

If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Source:

https://www.myhorizontoday.com/bankruptcy101/how-does-bankruptcy-affect-my-children/