What happens if you receive an inheritance before or after you file for Bankruptcy?
Once you have filed a Chapter 7 Bankruptcy case, any inheritance that you receive within 180 days after filing the Bankruptcy case becomes an “asset” and subject to your Bankruptcy case.
This asset may or may not be affected by your Bankruptcy case, depending on how many exemptions you have taken and what other assets you own. However, any inheritance acquired after 180 days after filing a Chapter 7 Bankruptcy becomes yours to keep.
What happens if you receive an inheritance during your 5 year Chapter 13 Plan?
Like a Chapter 7 case, any inheritance you receive within the 5 years of your Chapter 13 will become part of your assets. This may or may not affect your Chapter 13 case, since your Chapter 13 repayment plan is based on many other criteria other than the assets you currently hold (such as your disposable income, which creditors have made claims in the Bankruptcy, etc.).
What happens if you receive an inheritance before you file for Bankruptcy?
If you are “entitled” to receive an inheritance prior to filing your Bankruptcy case, then your interest in the inheritance likewise becomes an asset of your Bankruptcy estate. Some clients, knowing in advance that they are likely to come into an inheritance, attempt to “disclaim” their inheritance under New York State law. This may or may not be effective in a Bankruptcy case, and your Bankruptcy attorney should understand the exact circumstances of your inheritance so that he can calculate the inheritance together with your assets, debt and income.
Some clients knowing that they are going to come into an inheritance have the benefactor open a “spendthrift trust” account in the name of all beneficiaries. A spendthrift account cannot be claimed by your creditors, and under the Bankruptcy Code cannot be included in the Bankruptcy estate.
If you are in a difficult financial situation and require the services of an experienced bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.
