If you're considering filing for bankruptcy, you know it can impact many areas of your life. Often times though, bankruptcy really is the best answer to sorting out financial difficulties. Unfortunately, there's a side effect of bankruptcy that many people don't consider until the ramifications have arrived. In certain situations, filing for bankruptcy can have a direct impact on your children, regardless of their age.
Here's a look at some things to know about how bankruptcy can affect your children.
If you're included as the primary or secondary account holder on a credit account that also bears your child's name, and that account is included in the bankruptcy, it will most definitely affect the child. this is an unfortunate side effect of co-signed or joint credit accounts, even if the account had a perfect history prior to filing. Even worse, filing for bankruptcy will release you from the debt liability, but your children will still be responsible for the debt in addition to the hit on their credit. If your child is noted as only an authorized user of the card, you can avoid implications by simply having their name taken off the account before you file bankruptcy.
Student financial aid
Bankruptcy may have an impact on eligibility for certain loans, but it will not impact financial aid for college. In fact, thanks to the Bankruptcy Reform Act of 1994, it's federal law that government grants can't be denied because of bankruptcy issues, whether it's the parent or the children that filed. If a parent does have a bankruptcy filing though, it's unlikely that they will be eligible to co-sign on any loans.
Bankruptcy is basically divided into two parts: dischargeable and nondischargeable debt. As the name implies, dischargeable debt can be eliminated. Nondischargeable debts cannot be removed. The vast majority of debt is in the former category, but child support is one of the latter. And not only is child support nondischargeable, but it becomes what's called a "priority debt," or the first debt to be repaid.
If you are considering bankruptcy, the first thing you need to do is seek the help of Arthur M Richard. It's a difficult and confusing process, but a bankruptcy attorney has likely dealt with situations just like yours before. They have the experience and knowledge to make your filing go as smoothly as possible, and can help you get your finances restored quickly.