Hows an inheritance treated in a bankruptcy case?
• A: How an inheritance is treated in bankruptcy depends on when you become entitled to receive it and what type of bankruptcy relief you’re seeking. If you’ve filed for Chapter 7 bankruptcy, and you become entitled to an inheritance within 180 days of your filing date, the inheritance will be a part of your bankruptcy estate, and can be used to pay your debts. The important date is when your right to the inheritance is fixed, typically on the date of a person’s death. You might not receive property or money from someone’s estate for many months. If you’ve filed a Chapter 13 case, your inheritance can be used in determining how much you have available to pay creditors under your repayment plan, and the 180-day limit doesn’t apply. In either type of bankruptcy, you must inform the bankruptcy trustee about the inheritance. If you’re thinking about filing for bankruptcy, ask a bankruptcy lawyer how an expected inheritance might factor into your plans.
