Is there a timeframe to consider for an inheritance if I am filing bankruptcy?

When it comes to inheritance bankruptcy can be difficult. Under bankruptcy law, the bankruptcy trustee must seize any property not protected under bankruptcy exemptions, sell that property and then use the funds to repay the creditors. However, an inheritance has special rules. If you are filing bankruptcy and receive an inheritance, it is critical to understand the timeframes for protecting such benefits.

Timeframes for Inheritance

For those who are filing bankruptcy, the following circumstances must be considered in terms of inheritances.

• If you inherit property within 180 days of filing for bankruptcy (this is not discharge, but filing the documents) you must alert the court to the inheritance. This is the timeframe from the time the person dies, not when you receive the inheritance.
• If this is the case, the property is part of the bankruptcy estate and must be treated like all other property there.
• In Chapter 13, the inheritance is not sold, but it becomes part of the consideration to determine how much you must pay through your repayment plan.

If you receive the inheritance after that initial period, then you do not have to report the inheritance to the court in a Chapter 13 but it is necessary to do so in a Chapter 13 case.

Hire an Attorney

Due to the complexities of inheritances, hiring a bankruptcy attorney is critical. The attorney will work closely with you to determine the best way to protect these assets if it is possible, or how to reopen and include the inheritance in your bankruptcy.