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    Inheritance during bankruptcy

    Asked Jun 16, 2008, 06:48 PM 4 Answers
    If I receive an inheritance during bankruptcy, chapter 13, must I give the full amount to the courts or can some be kept? The kept money will NOT be used to pay any creditor.

    Last edited by goldie_9256; Jun 16, 2008 at 06:57 PM.
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    Fr_Chuck's Avatar
    Fr_Chuck Posts: 75,727, Reputation: 7217
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    #2

    Jun 16, 2008, 06:59 PM


    You have to notify the court of the money, The amount under the allowed amount can be kept, the balance will go to pay the debts, often at a higher percentage than originally figured.
    Since you owe the money, it would not be legal to attempt to not pay debts, on chapter 13, you have reduced payments due to the fact you could only afford to pay so much, so if you can pay more, you will have to.

    Also not to be questioning too much, why a chapter 13 and what was the percent of payment, since if you are paying less than 30 percent to unsecured creditors over all it gets treated in many ways like a chapter 7 that would have just discharged the debts without repayment. Was there a lot of late home or car payments that had to be caught up in a chapter 13 plan
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    goldie_9256's Avatar
    goldie_9256 Posts: 24, Reputation: 1
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    #3

    Jun 16, 2008, 07:08 PM
    Quote Originally Posted by Fr_Chuck
    you have to notify the court of the money, The amount under the allowed amount can be kept, the balance will go to pay the debts, often at a higher percentage than orginally figured.
    Since you owe the money, it would not be legal to attempt to not pay debts, on chapter 13, you have reduced payments due to the fact you could only afford to pay so much, so if you can pay more, you will have to.

    Also not to be questioning too much, why a chapter 13 and what was the percent of payment, since if you are paying less than 30 percent to unsecured creditors over all it gets treated in many ways like a chapter 7 that would have just discharged the debts without repayment. Was there alot of late home or car payments that had to be caught up in a chapter 13 plan

    goldie_9256.. we have not filed yet.. not sure if it will be 7 or 13.. Most likely 13 since we make too much money for 7... no late home or car payments. I know I owe the debt and understand most of the inheritance will have to go to the courts. My friend indicated that the bonuses she gets each year.. she has to give half to the courts.. just wondering what % I have to give..
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    Fr_Chuck's Avatar
    Fr_Chuck Posts: 75,727, Reputation: 7217
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    #4

    Jun 16, 2008, 07:18 PM


    This will not be viewed as the bonus which is income (pay) it will be looked at like savings and will far under the exemption rules, so what the exemption allows for money in the bank will most likely apply.

    But the laws on this is changing all the time, I did a survey about 6 months ago, I asked several bankruptcy attorneys and one of the bankruptcy trustee a set of questions. The trustee had clerks in his office research it, and since they are the ones doing the ruling I will have to use or go by his answer as the final correct. On some questions all of the bankruptcy attorneys including two from large bankrutpcy firms got all the questions wrong. In all of them, none of them got the questions correct, and some of the questions were simple like how long do you have to wait to file ( that law changed, including how chapter 13 is addressed)

    So what I found, not even the experts are right and some are wrong more than they are right.
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    goldie_9256's Avatar
    goldie_9256 Posts: 24, Reputation: 1
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    #5

    Jun 16, 2008, 07:27 PM
    Ok.. thanks for your help... Right now, I have no savings, neither does my husband. We both have 401K, however, we are putting in the minimum (1%) and we cannot touch that money. Interesting to know that even many of the experts don't know. I guess we will talk to the attorney and let them give us guidance. Let me ask this.. is there a difference with 7 and 13 and the inheritance? Even if we file chapter 7, we get the inheritance.. can't they still go after it? I still really doubt that Ch 7 will be an option.. but until the attorney does all the figures.. we won't know.
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