You are supposed to disclose all of your assets when you file for bankruptcy, but what happens if you come into more money later? This is a question many filers who inherit money end up asking. There are some rules about what bankruptcy filers should do after being notified about an inheritance. A Montgomery County Chapter 13 bankruptcy lawyer can tell you about how such a matter needs to be handled.
Do I Have to Disclose Money I Inherit During Bankruptcy?
Yes, if you inherit any money within 180 days of filing you must make that known to your bankruptcy trustee. This is true even if you may not receive your inheritance within 180 days. The date that matters is when the person leaving you the inheritance passes away.
Do not, under any circumstances, try to hide these assets. Even if you find out on day 179 of 180 that you are going to inherit money, trying to get away without reporting it doesn’t just jeopardize your bankruptcy case and your chance to discharge your debts. Your actions could also result in criminal charges.
Can the Money I Inherit Be Liquidated With Other Assets in Chapter 7?
When you file for Chapter 7 bankruptcy, your assets get liquidated to pay off creditors. This can include any money that you inherit during the bankruptcy process. You may be able to use exemptions to protect some or part of your inheritance, but nothing is guaranteed.
Can an Inheritance Affect My Chapter 13 Payment Plan?
When you file for Chapter 13 bankruptcy, you make a payment plan that you can afford. Over the next three to five years you make payments to your creditors and pay off a significant amount of your debt. How much of your debt gets paid off largely depends on how high of a monthly payment you can afford, but many creditors are just happy to get something.
So it shouldn’t be a surprise that creditors who see an inheritance will expect more money. Once you inherit money and report it to your bankruptcy trustee, it’s certainly possible that your plan will be adjusted and that you will have to pay creditors more.
What If My Spouse Receives Money?
If your spouse is the one who is set to inherit money, they should be able to keep it as long as the inheritance is meant only for them. Then you have to make sure that the money stays out of any joint accounts so that there can be no confusion about who this asset belongs to. As long as you keep the money separate and you are not filing for bankruptcy jointly with your spouse, they should be able to keep their inheritance.
Meet With a Bankruptcy Lawyer
If you have questions about filing for bankruptcy, we can answer them. Contact Mudrick & Zucker to schedule a consultation with our team. We’ll help you figure out if this is the right path out of debt for you.
