QUESTION
Can the bankruptcy courts take my inheritance in a chapter 13 bankruptcy?
Asked on Jan 03rd, 2012 on Bankruptcy - California
More details to this question:
Can the bankruptcy courts take my inheritance chapter 13? I am about to start my final year of a 5 year plan and I am about to receive money from a revocable living trust. Do I have to report it? Will they take it all or just increase my monthly payments to trustee?
5 ANSWERS
The effect of an inheritance while you are in bankruptcy depends on timing. If you inherit within 180 days of the date your petition is filed, that inheritance will become property of your bankruptcy estate. You will be required to bring that matter to the attention of the court and your trustee by amending the paperwork filed with the court to disclose the inheritance.It does not matter that you might not actually receive anything for months or years. The key date is when your loved one passed away. In a Chapter 13, the value of the inheritance will be used to determine, in part, how much you must pay into a Chapter 13 plan in order to be fair to your creditors. If the inheritance is received after that initial 180 day period, the effect is different. If you are in a Chapter 13 case, however, it may still be property of your bankruptcy estate. In addition, your Chapter 13 trustee may also contend that good faith requires devoting any excess funds or property to the plan.
Answered on Jan 09th, 2012 at 11:39 AM
Seth D. Schraier, Esq. Law Office of Seth Schraier 3647 Broadway Suite 4G New York, New York 10031 Cell: (914) 907-8632 www.SchraierLaw.com
Read your Chapter 13 plan as confirmed. It holds the answer.
Answered on Jan 09th, 2012 at 10:40 AM
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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An inheritance becomes propety of the bankruptcy estate if it is received within 180 days of the petition.
Answered on Jan 09th, 2012 at 10:10 AM
judith runyon
It depends upon how much your plan is providing to unsecured creditors. Talk to your bankruptcy attorney.
Answered on Jan 09th, 2012 at 9:46 AM
Trusts & Estates Attorney serving Camarillo, CA
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Law Offices of Larry Webb
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Yes you must disclose the inheritance BUT it is not income and the trustee is NOT entitled to it. HOWEVER you should engage an attorney familiar with local practice to guide you.
Answered on Jan 09th, 2012 at 9:32 AM