If you inherit money during bankruptcy, do you have to give it up to the bankruptcy trustee? You may, but a lot depends on when you inherit it and which kind of bankruptcy you file for. A Bergen County bankruptcy lawyer can help you address your specific situation.
Will I Have to Give Up the Money I Inherit?
In some cases, yes. If you inherit money within 180 days of filing for bankruptcy, you must make it known to the bankruptcy trustee. If you have filed for Chapter 7 bankruptcy, this inheritance can then be treated like any other asset you have and used to pay down debts.
It’s important to note that when you’ll actually receive your inheritance isn’t the most important date. If you are notified that you will inherit money within 180 days of filing, you must make this known even if it will take a little longer than that for you to actually receive the funds.
If you are filing for Chapter 7 bankruptcy and you receive money from an inheritance, you might be wondering if any exemptions apply to it. You may be able to use a state or federal exemption to protect your inheritance, but it’s no guarantee. Talking to your lawyer and seeing what can be done in your specific situation is your best bet.
Can The Money I Inherit Impact My Bankruptcy Repayment Plan?
When you inherit money during a Chapter 13 bankruptcy, that can affect your repayment plan. Chapter 13 requires you to make a plan to pay off your creditors over three to five years. In many cases, these plans don’t actually result in a filer paying off all of their debt. Instead, the creditors get a good chunk of what they are owed and they are happier to get that than nothing.
Your income and assets are obviously going to be part of the calculation when you make a payment plan. If you inherit money, that can result in more going to your creditors. You have a significant asset being passed down to you and your creditors are going to notice it. It’s likely that your monthly payments to creditors will be higher than they would have been had you not received your inheritance.
What Happens If My Spouse Comes Into Money?
If your spouse is the one who is going to inherit money, that should not affect your bankruptcy proceedings unless you are filing jointly. You both need to be careful about where the money goes though. A good example of this would be if you commingle an inheritance with marital assets by putting it into a joint bank account. That could complicate matters.
Talk to a Bankruptcy Attorney
If you have more questions about how an inheritance could affect your bankruptcy, you should talk to a lawyer. Contact the Law Office of Boyd & Squitieri to schedule a consultation with an experienced attorney who can guide you through this process.
