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Do we lose childrens education funds in a bankruptcy?

If we were to declare bankruptcy, would the childrens education fund be taken away? It is with Cdn Scholarship Trust Fund and was only ever paid for with the Family Allowance and has not been contributed to for 4 or 5 years. Apparently the proceeds can only be withdrawn when the child enters a post secondary program.

One Response to “Do we lose childrens education funds in a bankruptcy?”

Barton Goth, GCO Inc. Bankruptcy Trustees said...

As far as I am aware the Canadian Scholarship Trust Fund is an organization through whom you primarily invest in RESP’s. Currently, if you file a bankruptcyand have an RESP for your children the RESP is an asset that you will loose.

When a trustee cashes in an RESP, there are usually plan administration fees to pay, and all government contributions are returned to the government, so the money that the trustee receives is generally far less than the value of the RESP if it is not collapsed.

If you are in financial difficulty and have an RESP that you want to protect, there are options. In a bankruptcy situation, the RESP can be repurchased from the trustee. Or alternatively, if a consumer proposal is filed, the RESP will not be affected. For further information on what to expect, or if you will be able to protect these types of funds you should contact a licensed trustee in your area for details.

If the your funds are held in something other than an RESP I would suggest bringing in all related documents to a licensed trustee, and upon review he will be able to advise you what would happen with these funds.