Subscribe to E-Mail Updates.
Join Us on Facebook!
Watch Us on Youtube.
Follow Us on Twitter!Can Creditors Claim An Inheritance In Bankruptcy?
According to bankruptcy law, if a debtor receives an inheritance within 180 days of filing for bankruptcy, that inheritance becomes the property of the bankruptcy estate. In this case a debtor will be required to disclose to the bankruptcy trustee and debtors that they received an inheritance. The bankruptcy law calculates the 180 days from the date of death of the person granting the inheritance. For example, if your uncle left you a $100,000; but you did not receive it until 2 years after he died, your inheritance could still become the property of the bankruptcy estate if your uncle died within 180 days after you filed for bankruptcy.
An inheritance receives different treatment in a Chapter 7 than in a Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, an inheritance within 180 days after your case was filed, will go to the trustee without any exemptions and will be used to repay creditors. In a Chapter 13, (before or after the 180 days) an inheritance will be used to calculate how much you should pay creditors. But in a Chapter 7 bankruptcy, if the inheritance is received after the 180 day time period, the trustee has no claim to it.
Related Posts
- I May Inherit Money Soon After My Bankruptcy Discharge, Now What?
- The Bankruptcy Trustee Looks Out For Creditors’ Interests, Who’s Looking Out For Your Interests?
- Debtor Denied Bankruptcy Exemption For Trust
- Bankrupt Debtors Lose Discharge After Spending Annuity Payouts
- Surrender Your Car And Fully Satisfy Claim In Bankruptcy
February 1st, 2009 at 7:56 am
What happens if the loved one dies on the 180th day? What are the chances of the trustee siezing the inheritance if there are 42 creditors involved in a chapter 7 that has been discharged? If the amount is around 15,000.00 would it be enough to devide up among the 42?
February 5th, 2009 at 3:53 pm
If the debtor becomes entitled to the inheritance (the relative dies on the 180th day) the windfall must be reported to the trustee. It is up to the discretion of the trustee rather to pursue the windfall and make the chapter 7 an asset case. In general if there is enough funds on hand to cover administrative expenses and provide a small dividend to the unsecured creditors they will pursue the matter as an asset case. I would guess if the windfall is around $15,000.00 the trustee will most likely pursue the matter. Be sure to contact your attorney and trustee and notify them of the situation. If creditors don’t file a claim the debtor migth still get some of the money back.
June 29th, 2009 at 10:07 pm
can the loved one who is dying choose to leave the inheritance to the debtor’s non-filing spouse? if he does that, will the inheritance still be considered part of the bankruptcy estate in a chapter 7 case (if the loved one dies within 180 days of the filing)?