More Ways Bankruptcy Can Affect Your Children

STUDENT LOANS: Several factors should be considered regarding student loans. First, student loans, including parent PLUS loans, are generally not dischargeable in bankruptcy without a showing of undue hardship. The burden to prove undue hardship is very great. Second, if you are in financial difficulty, you may not have a high enough credit score to get a parent loan to help your child pay for college. So if you are having debt problems when your children are still several years away from going to college, you should consider filing bankruptcy to wipe out your debts, so that you have more money available to help out your college bound kids, and your credit score can recover by the time you have to get loans to help your kids pay for college.

CO-OWNERSHIP AND COSIGNED LOANS: Many parents want to try to help out by setting up joint bank accounts with their minor children. If you have done this, and then file for bankruptcy, you may find that your bankruptcy trustee attempts to seize the bank account and use it to pay towards your creditors. There are ways to set up accounts to prevent this from happening. Similarly, if you cosign a loan for your child to help them out, if they ever get into financial difficulty and have to file bankruptcy, your credit score will be negatively affected and you will be hounded to pay the bill.