You’ve made the difficult decision to file for bankruptcy and your working hard to get through this difficult time. Now you’ve lost a loved one and you are grieving. To make matters even more complicated, you’ve been informed that you are going to receive an inheritance and you are wondering how this could be impacted by the bankruptcy.
The 180 Day Rule & Inheritance
It doesn’t matter if you’ve filed for Chapter 7 or Chapter 13 bankruptcy, the 180 day rule exists. This means that if an inheritance is received within 180 days of filing for bankruptcy, the inheritance must be included as part of the bankruptcy estate. Your bankruptcy paperwork must be amended to include this inheritance.
This rule applies to inheritances that are both property and/or money.
To ensure that the paperwork is correctly filed be sure to contact your bankruptcy attorney. There are numerous forms that might need to be amended depending on the type of inheritance you received.
If you are given an inheritance after the 180 days, different rules may apply depending on the type of bankruptcy you’ve declared.
Chapter 7 Bankruptcy And Inheritances
If more than 180 days have passed since you have filed for Chapter 7 bankruptcy, you get to keep the inheritance. It will not be considered part of the estate.
Chapter 13 Bankruptcy And Inheritances
Inheritance that is received more than 180 days after declaring Chapter 13 bankruptcy could be considered income and may be factored into calculating the three – five year repayment plan. This depends on whether or not the inheritance is considered exempt or not.
What If The Inheritance Is Given To A Non-Filing Spouse?
If your spouse didn’t file for bankruptcy with you and the inheritance is theirs, the inheritance is not considered part of the bankruptcy estate. However, this must be approached with caution because if part of that inheritance is used to help you with your assets, it could lose that status and then be considered part of the estate.
It’s Always Wise To Consult With A Bankruptcy Attorney
Even though bankruptcy helps to stop creditors from harassing you and from coming after your assets, it’s not always easy to navigate changes that may occur during the process. The best way to ensure that you have a smooth bankruptcy experience is to consult with an experienced attorney.
An attorney can help you determine if you really should be filing for bankruptcy, what kind of bankruptcy best fits your situation, and can help you prepare for the process. Then, when any questions arise during the process, you will have a trusted adviser to turn to.
Contact Jeanne Marie Cella Esq With Your Bankruptcy Questions
For more than four decades Jeanne Marie Cella has been practicing bankruptcy law. She has represented thousands of former clients and has helped to guide them through the process of filing for bankruptcy. If you or a loved one are considering filing for bankruptcy or have filed and have questions about steps you can take to make the process smoother, contact her today to learn more.