Many people wonder whether they can keep their inheritance when dealing with bankruptcy. Knowing how bankruptcy can impact your inheritance is vital for preparing yourself financially for the aftermath of bankruptcy. You may not always lose your inheritance, depending on certain circumstances. Talk to a Tullahoma bankruptcy attorney to find out more.
Will Bankruptcy Affect My Inheritance?
When it comes to bankruptcy and inheritance, many people have a variety of questions. A common question is whether inheritance is sold off like other financial assets and property in bankruptcy. This may not always be the case, depending on when you received the inheritance.
Some bankruptcy cases allow debtors or codebtors to keep their inheritance, while others do not. Knowing how this works is important for preparing for the financial aftermath of bankruptcy. This is especially true for those who might be planning to use inheritance to escape debt payments after a bankruptcy case that requires a repayment plan.
In many cases, an inheritance that is received more than six months or 180 days after bankruptcy is kept by the recipient. This means that inheritances received within 180 days of filing for bankruptcy are deemed part of the bankruptcy estate for any surviving codebtors. Life insurance policies and death benefit plans are also deemed part of the bankruptcy estate within 180 days of filing for bankruptcy.
Depending on different factors, this may apply to those filing jointly for Chapter 7 bankruptcy or Chapter 13 bankruptcy. In other words, if one codebtor passes away and leaves behind an inheritance, the living codebtor may have to give the inheritance to the bankruptcy trustee. Exploring how bankruptcy trustees investigate financial assets may help with understanding this process better.
How Bankruptcy Trustees Investigate Your Finances
A bankruptcy trustee investigates bankruptcy cases by examining all your financial assets. These often include your savings, income level, property, secured debts, insurance proceeds, tax returns, divorce payments, alimony, child support, and other financial assets. Inheritance is included in this investigation.
The goal of a bankruptcy trustee is to determine how much money you can afford to put towards unpaid debt during bankruptcy. Some financial assets like alimony and child support are usually exempt from bankruptcy. Your trustee will determine which financial assets are exempt from bankruptcy based on factors like:
Whether the financial assets or property are life necessities
Whether these assets are necessary for work
Actual value of the property
It is vital to be honest and not hide financial assets from your bankruptcy trustee. Otherwise, this could create various problems and may lead to legal problems like fraud. Bankruptcy trustees will use all of this information to determine how much of your finances will be liquidated or what your new repayment plan will be.
Call Tom Bible Law Today
You may not have to deal with the confusing process of filing for bankruptcy alone. Feel free to call us at Tom Bible Law today at (423) 424-3116 for a consultation about your legal options for retaining your inheritance during bankruptcy. Our experienced team of Tennessee bankruptcy lawyers might be able to help you retain certain financial assets during bankruptcy. We serve clients throughout the Tennessee cities of Chattanooga, Kingsport, and Tullahoma.