Parents often struggle setting priorities. Too often, in their attempt to provide help to their children, they end up neglecting their own retirement planning until it’s too late. In a recent New York ruling, the bankruptcy court weighed in on this dilemma.

As a bankruptcy attorney in Indiana, I’m always vitally interested in cases from other states, and this one is particularly fascinating. A Mr. and Mrs. Boyd filed a Chapter 13 bankruptcy plan. While going over the couple’s income to see how much money they would have to make payments on their debts, the court noticed that every month, the Boyds were sending $200 to their daughter. This daughter, well into adulthood, had gone back to college, using financial aid and loans to pay for it. The $200 from her parents was to help buy books and small necessities. The bankruptcy court ruled that this was not a necessary expense for the parents, and that the Boyds needed to use all their after-expense money towards paying off their loans.

Now, not having all the information about the case, I don’t know if the Boyds have retirement plan accounts such as 401k’s or IRA’s. But, if they do have such accounts, the bankruptcy court will consider those exempt assets, meaning the Boyds can keep the money saved for their retirement rather than using it to repay loans. On the other hand, no matter how hardworking and deserving the daughter it, the court decided the parents needed to pay bills first, and think about being generous to their daughter later.

The bottom line here is that bankruptcy law is designed to give people a fresh start, not a head start. As for the adult children – well, they will need to find their own fresh start!