Protecting College Funds In Bankruptcy
By L. Jed Berliner, Western & Central Massachusetts Bankruptcy Attorney on Apr 29, 2009 in Benefits of Bankruptcy, Exemptions In Bankruptcy
It’s possible to protect college funds (529 Plans; Educational IRAs) when filing bankruptcy. Complicated, but possible. Bankruptcy law looks at the timing of the contributions and not the current balance. Here are the rules:
1. Contributions made earlier than 720 days before a bankruptcy case is filed are fully protected.
2. Contributions later than 720 days but earlier than 365 days before the bankruptcy case is filed are protected up to $5,475.00.
3. Contributions earlier than 365 days before the case is filed are not protected at all.
Boy, I can’t tell you how easy I just made some very tough reading for you. These provisions of the Code are way hard to read! Contact me or any of my Bankruptcy Law Network colleagues; we’ll make the rest of the law as easy for you to understand as possible.
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