Educational savings accounts are a great way to save money for college but if you are considering filing for bankruptcy, you should speak to an experienced bankruptcy attorney about the timing of contributions.
Section 529 of the Internal Revenue Code makes special tax allowances for contributions to certain types of education accounts. 529 education accounts enjoy protection from creditors and a trustee during bankruptcy, but special rules apply. Most important is the timing of the deposits. For instance, deposits made within a year prior to the bankruptcy filing are not protected at all. Deposits made between 365 days and 720 days prior to the bankruptcy filing are exempt up to $5,850 per beneficiary. Any deposit made over 720 days before filing bankruptcy is entirely exempt.
If you are considering bankruptcy and need help with your financial situation, talk to one of our experienced bankruptcy attorneys today.