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inheritance and bankruptcyBelieve it or not, debtors considering filing for bankruptcy often receive inheritances prior to or just after declaring bankruptcy.  If you are expecting an inheritance or have received or are expecting to receive an inheritance within 180 days of filing for bankruptcy you need to disclose this information to your bankruptcy attorney as it can affect your decision on whether now is the time to get your case filed.

A bankruptcy lawyer can determine whether or not filing for bankruptcy would be in your best interest. If you receive an inheritance and then file for bankruptcy you risk losing the inheritance to the bankruptcy trustee who will use the funds to pay your creditors and pay his fee. If the inheritance happens prior to a bankruptcy filing you may want to consider having your attorney settle your debts rather than filing for bankruptcy. If your inheritance is greater than the debts that you owe and you do not have enough bankruptcy exemptions to protect the inheritance you will lose it. Therefore if you have your attorney settle your debts on your behalf, settlements of between 25%-50% of your total debt owed is quite common. With debt settlement you risk getting sued by a creditor but if you have the funds available they will most likely always settle for a favorable amount.

If you have received an inheritance after filing for bankruptcy you have a couple of options. If your case was a chapter 13 bankruptcy, you can simply have your case dismissed and then settle your debts. if your case was a chapter 7 bankruptcy you can have your case dismissed only if you fail to pay the required filing fee or complete the post filing financial management course. Therefore you may want to consider paying your filing fees in installments and wait to take your post counseling course if you think there may be an inheritance in your near future.

If you have additional questions regarding how an inheritance can affect your decision to file for bankruptcy, you should schedule a free consultation with a bankruptcy lawyer by calling 206-682-7975

  • Richard Symmes

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