Sections of Texas Bankruptcy Code
Education 54.639, 54.709
Texas bankruptcy law exempts all savings plan trust accounts designated for higher education when a debtor files for Chapter 7 or Chapter 13 bankruptcy. The Texas education law states that money placed into a Texas education savings plan is exempt from levy, attachment, garnishment or judgment by creditors. What this means is that if you have money in a Texas education savings account, that money cannot be used by a bankruptcy trustee to pay creditors. On the other hand, just placing money in a regular savings account and stating that is for educational expenses is not enough to satisfy the requirements of this bankruptcy exemption.
For example: If you are saving money for your child to go to college, placing that money into the Texas Tuition Promise Fund will make that money exempt from creditors when you file for bankruptcy. Even if you have $10,000 in this fund, the bankruptcy trustee cannot force you to liquidate the account. But it is important to remember that the money must already be in the fund in order for it to be protected by this exemption.
Contact your Dallas-Fort Worth bankruptcy attorney to discuss how you can protect money earmarked for education during a Chapter 7 or Chapter 13 bankruptcy.