Depending on when you inherit, your inheritance could potentially affect your ability to file for bankruptcy, your repayment plan, or whether your creditors may have access to your inheritance.
If you inherit before filing for bankruptcy, that amount could be considered among your assets and may determine whether you're eligible to file for bankruptcy. However, this largely depends on your income and how much you're in debt (see below for some options you may have to prevent this problem).
If you inherit within 180 days of filing for bankruptcy, those assets or income may be treated as other assets in a Chapter 7. You definitely need to speak with your bankruptcy attorney to see what your option are in that situation. If you apply for Chapter 13 bankruptcy, receiving your inheritance may increase your repayment installments.
But generally speaking, after 180 days the court cannot take your inheritance.
Timing is the important thing to keep in mind. The 180 days begins on the date you file for bankruptcy. Inheritance begins on the date of the death of the person who leaves you the bequest.
If you're considering bankruptcy and think you might be inheriting soon, talk to a bankruptcy lawyer about different options you may have for protecting your inheritance. This might include creating a special trust to hold the assets or having the inheritance bequeathed to someone else that you have confidence in.
Castle Law Office has been handling bankruptcies for Kansas City clients from more than 14 years. If you need the fresh start bankruptcy can provide, call us today at 816-842-6200 to speak with an attorney. Or click here to email us and schedule your free consultation.