When you file for bankruptcy, all of your assets are made part of your bankruptcy estate. In most cases, figuring out what your own your assets is easy. Will you be allowed to keep an inheritance that you become entitled to when preparing to file a bankruptcy or even after you file? ? That all depends on the amount of the inheritance and when you became entitled to receive it.
An Inheritance Before You File
We have all heard the urban myth of the rich Aunt Tillie who died and left millions of dollars to a relative who didn’t even know Aunt Tillie existed. A person becomes entitled to an inheritance the day a loved one passes, even if you were not aware that you were named in their will or even if the person had died. If you become eligible to receive an inheritance before filing a bankruptcy, your bankruptcy attorney may recommend several options. If you stand to receive a considerable sum, you may be able to pay off your debts or negotiate settlements with them, avoiding bankruptcy altogether. There may be ways to convert the proceeds of an inheritance into other types of property that are safe form seizure. Smaller inheritances may be exempt under Connecticut’s wild card category, with only a small portion available to a bankruptcy trustee. Depending on the amount, the trustee may determine that it is too small to collect and allow you to keep it. It is important to consider the options before filing a bankruptcy once the existence of an inheritance is known.
An Inheritance After You File
You can’t always predict when rich Aunt Tillie might move beyond the Pearly Gates. If you become entitled to receive an inheritance within 180 days after filing a bankruptcy case, you are required to contact your bankruptcy attorney and the Bankruptcy Trustee disclosing this mew asset. Amended schedules will have to be filed. Again, the trustee may decide not to seize small inheritances, but could take a nonexempt inheritance to pay your creditors. However, if you become entitled to an inheritance more than 180-day period after you filed the case, you are not obligated to report it or amend your filing.
As you can see, the bankruptcy code is complex, and even minor errors can result in serious consequences. If you think you might become entitled to an inheritance before or within 180 days of filing for bankruptcy, then speak with a qualified attorney who will outline your options and responsibilities.
For over 35 years, Eugene S. Melchionne Attorney at Law has provided effective debt relief services to Connecticut residents struggling to meet their financial obligations. Visit the website to learn more about his background and experience. Follow him on Twitter for more bankruptcy advice, or call (203) 757-3437 to schedule a consultation today.