Will the Bankruptcy Trustee Take My Child’s College Fund in Kansas?

by Jill Michaux

October 10, 2007

Is my childís college fund protected from creditors in bankruptcy in Kansas? Yes and No.

Will the bankruptcy trustee take the money I have been savings for my childís college education? Yes, if the money is in an ordinary savings account. No, if the money is invested in a Learning Quest account more than two years.

Learning Quest

Learning Quest is a 529 education investment program established by the State of Kansas. It is administered by the State Treasurer and managed by private investment companies. A 529 account offers tax deferred earnings growth and other tax advantages.

If you are a Kansas resident and have been saving for your childís college education in a Learning Quest account, the money in the account is exempt from claims of your or your childís creditors.

There are two important exceptions to exemption rule:

1) amounts contributed within one year of the date of a bankruptcy petition or the execution of judgment for claims against the account owner, and
2) accounts exceeding $5000 contributed between one and two years before the filing of a bankruptcy or an execution on judgment for claims against the account owner.

Monies covered by these two exceptions are not protected in bankruptcy.

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Jill Michaux has helped Kansas consumers with debt problems for three decades. She and her partner, Mark Neis, are Topeka's only bankruptcy specialists, board certified in consumer bankruptcy law by the American Board of Certification. She help start the National Association of Consumer Bankruptcy Attorneys.

Last modified: May 7, 2014