Almost immediately after you file for consumer bankruptcy, the New York State Bankruptcy Court may appoint a bankruptcy trustee to your case. This individual may be granted the legal authority to collect and sell your property to repay your outstanding creditors. With this, say you recently inherited property from a loved one who has sadly passed away. Well, in this case, you may wonder whether it can be grouped into the “bankruptcy estate” that your trustee has access to. If this is the one thing that is holding you back from petitioning, please read on to discover if your trustee can take your inherited property so easily, and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C., can help you make the wisest financial move given your current position.
Can a bankruptcy trustee take inherited property after I file for bankruptcy?
When it comes to property you become entitled to, timing is everything. This is because under federal law, there is what is known as the 180-day rule. This rule holds that if you become entitled to an inheritance within 180 days after your initial consumer bankruptcy filing date, it may be included in your bankruptcy estate, and thus your bankruptcy trustee may be allowed to take it.
Importantly, you must comprehend what “entitled to receive” means. It is generally when the loved one who left you with the inheritance passed away. So, their date of death may overrule the date the probate process finishes or the date when the funds are finally distributed to you. Therefore, any delays in this process may not be enough to shield this property from your trustee.
Does it matter if I disclaim or refuse the inheritance during bankruptcy?
The property that your loved one has gifted to you may not only hold great monetary value but also deep sentimental value. So it is rather understandable if you do not want to risk losing it in your consumer bankruptcy case proceedings. For similar reasons, debtors sometimes disclaim or refuse the inheritance at this time. This may be an attempt to have the property passed down to the next beneficiary (i.e., your child, grandchild, etc.) and essentially “keep it in the family” instead of it being sent to creditors.
Well, we must emphasize that you must be very careful when making this move. This is because the New York State Bankruptcy Court may very easily take this as an attempt to fraudulently transfer the property to intentionally hide it from your creditors. This scrutiny may manifest into actual bankruptcy fraud charges, which may result in much more severe consequences than a bankruptcy discharge. Here, you may want to provide the court with better reasoning, such as that the inheritance would have given you a greater financial burden than benefit.
There is no shame in asking for help, especially when you are dealing with something as serious as a legal matter that could affect your physical, emotional, and financial well-being. So please retain legal assistance from a competent Rockland County bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq., P.C. We will happily lend a hand.
