Protecting College Funds In Bankruptcy

29 Apr Protecting College Funds 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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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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