Skip to main content
(404) 685-8800 Contact Us
My kid’s in college on a 529 plan, will bankruptcy affect it? Atlanta, GA

Personal Attention & Experience Since 1971 Family-Owned, Family Focused

Client Reviews

My kid’s in college on a 529 plan, will bankruptcy affect it?

lawyer in a lawyers library

Giving their children the best opportunities in life is something that parents strive to do in Atlanta, Georgia. This often includes saving for college, and savvy parents often do this through a 529 plan that maximizes the money under certain tax advantages. This type of plan allows the funds to be treated as “completed gifts” by the Internal Revenue Service. 

Even those savvy parents that plan ahead for their own retirement and their child’s education get hit with, well life. A sudden accident, medical diagnosis, unemployment, economic changes and much more can cause financial hardship. Chapter 7 bankruptcy is a viable solution, but some parents wonder what will happen to these educational funds. Could they lose them to satisfy creditor claims? 

Technically, these funds are considered a part of a bankruptcy estate, which means that it is included in the total available assets that could be used to pay off creditor claims. Before paniking, remember that the Bankruptcy Code provides for certain exemptions such as a homestead or a car. These funds can be considered an exemption, but they have to pass a couple tests first. 

The first is a beneficiary test. If the plan was set up to benefit a child or grandchild, it may be eligible for exemption. If it was created for anyone else, including a farther removed family member such as niece, it will likely not be eligible for any exemption.

This is not the only test for a 529 college education plan. Our next post will discuss the further considerations and options parents may have for keeping these funds out of their bankrutpcy estate. 

Source: Opposing Views, “College 529 Plan & Bankruptcy,” Beverly Bird, May 7, 2013

Posted on behalf of Gingold & Gingold

1718 Peachtree St NW, #385
Atlanta, GA 30309

Phone: (404) 685-8800

First Free
Appointment



Disclaimer Privacy Policy

I have read the Disclaimer and Privacy Policy

Our Client Reviews

Gingold & Gingold LLC
5.0 / 5.0

Based on 28 reviews

Jack L.

They did an excellent job with my case. Jamie took the time to really listen and understand things. She delved into the details and was extremely knowledgeable and non judgmental. Very professional and they know what they are doing. Would definitely recommend!

All C.

Mr. Gingold was recommended by an attorney I had worked with previously. I met with Ira Gingold to discuss credit issues. He went over each specific issue thoroughly. He advised me of the potential outcomes. He did all this in one meeting for a very reasonable price. When we finished I was confident in moving forward with a resolution. He definitely wants to help people take the appropriate course of action for their circumstance.

Karen B.

Dear Mr Gingold, There are so many reasons to be thankful for all you have done and will do. Anyone who has ever had unfavorable experiences with an attorney or the legal system will feel the trepidation that I experienced once I realized that my situation seemed hopeless. It was by chance and happily good luck that I decided to put my future and sanity into your hands. I was mortified at having to deal with my debts by claiming bankruptcy. I remember in our first meeting how you assured me that I was not alone and should not feel ashamed. And, anyone in this position obviously does not have money to spare and you were clear about all the costs and allowing me to pay according to my own ability to do so. You advised me in all aspects of the law, but also, you were at each meeting incredibly supportive and complementary of my personal and professional plans. Anyone else in this situation should feel blessed to have access to your expertise and support.

Lyla B.

I thought the process of filing bankruptcy was going to be a difficult one. However, Gingold & Gingold treated me with respect and dignity from the moment I walked through their door. I had the pleasure of working with Jamie. She is very responsive, professional, and knowledgeable. She took the time and listened to my every concern and handled each and every one of them to my satisfaction. My experience with filing bankruptcy under Gingold & Gingold's representation exceeded my expectations in a major way. They gave me such a peace of mind. I am very pleased with my decision of going with Gingold & Gingold to represent me when I filed Chapter 13 bankruptcy.

Julie T.

Wow! I am finally out of debt and can say that I am debt free after completing my chapter 7 bankruptcy case with Gingold and Gingold. Mr dangled was very knowledgeable and direct with regard to my debt situation. there were no surprises and the case went as I was advised. The staff was also very helpful whenever I had a question. I will definitely recommend them in the future to my friends.

Sherard W.

I cannot say enough about this law firm. From the initial consultation to our discharge, the entire office kept me updated with every step of the entire process. I came to the Gingold after a bad experience with another law firm. Ira and Jamie immediately began treating me like family through this experience. In the end, they assisted with eliminating many debts including my 2nd mortgage. I cannot say enough about the experience and knowledge that Ira brought to the table from the office visits to the court time. Thank you very much for helping me through this tough time. Thank you.

Write a review