How long does money have to be in a 529 before it is safe from a chapter 7?
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How long does money have to be in a 529 before it is safe from a chapter 7?
I need to file for a chapter 7 but I also need to open a 529 for my 17 year old. I need to know how much I can open it up with that won’t be taken away from my child in N.C.
Asked on May 20, 2009 under Bankruptcy Law, North Carolina
Answers:
MD, Member, California Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
The way things work is not when but how. See, if you basically start hiding assets, depending on how long before, in what and how, you may not have these assets be safe from the bankruptcy trustee or court. Usually, 529 plans are exempt under Chapter 7 and the trustee cannot touch it.
Review the following:
1. I believe there is a 2 year and 1 year threshold on what is included and not included in the bankruptcy and what is exempt and not exempt concerning a 529 plan. See, 529 plans are by some jurisdictions considered in control by the settlor (contributor) and therefore belongs to him or her, not the child.
2. To review what can be exempt or qualify exempt in your property, try www.attorneypages.com and search for an attorney in North Carolina.
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