While it’s not very common, occasionally, an Aurora or Parker client will receive an inheritance during or just after their Chapter 7 bankruptcy. Timing is everything when it comes to an inheritance. After you file you Chapter 7 bankruptcy petition, all your assets that can be liquidated and sold by your bankruptcy trustee is considered your bankruptcy estate. Your estate includes all the property your own at the time your bankruptcy petition is filed. Things that you buy or own after your bankruptcy are not a part of your bankruptcy estate. However, there are a few exceptions, and one of them is an inheritance.
What If I Inherit Money or Property in Centennial: Do I Have to Report It?
In order to make sure people don’t cheat the system, the Bankruptcy Court has determined that if a person inherits money or property within 180 days after they filed their Chapter 7 bankruptcy petition, they must report it. This is so you can’t file for bankruptcy while a family member is on their deathbed, getting rid of all your debt just before inheriting a fortune. However, if your relative passes away 181 days after you filed, then it does not have to be included in your bankruptcy estate. Even if you don’t physically have the inheritance within the 180 days, if your relative dies within the 180 days and you are set to inherit money or property, you must report it. The 180 days is from the day of the death, even if you don’t find out about the inheritance until later.
How Will Reporting an Inheritance Affect My Centennial Chapter 7 Bankruptcy?
An inheritance will affect your Chapter 7 bankruptcy depending on the amount you inherit and where you are in the bankruptcy process. If you learn about an inheritance just before you file your Chapter 7 bankruptcy, you may have enough to pay off your creditors or at least negotiate a settlement with them. If it’s not enough for that option, you may be able to exempt your inheritance before filing. If you have already filed, and you receive your inheritance within the 180 days, your Centennial bankruptcy attorney will need to prepare amendments to your bankruptcy schedules and statements. Discuss options with your attorney to see all the options the court and trustee can do with the new information. The worst thing you can do is not report it. This could result in criminal charges, if discovered.