How to File for Bankruptcy While Receiving an Inheritance
It is stressful enough to have to file a bankruptcy, but occasionally things get even worse. You get the news that a close relative has died and left you an inheritance. For a moment, your grief gets relief from the thought of an inheritance. Then you realize that you may not see much of the money because it is going to pay off some of your debts that you claimed in your bankruptcy.
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Instructions
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File for bankruptcy and get the proceedings moving. The two types of personal bankruptcy are Chapter 7 and Chapter 13. Chapter 7 liquidates a debtor's nonexempt assets to pay off as much accrued debt as possible. Chapter 13 allows a working debtor to restructure his debt in order to develop a plan to pay it off in three or five years.
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Notify the bankruptcy court if you received an inheritance within 180 days of the date you filed your bankruptcy. Your inheritance is considered part of your assets and can be used to pay off your debt. The 180 days is measured from the date you file for bankruptcy to the date the person leaving you an inheritance dies. It does not matter when the estate is settled. Failing to report your inheritance is considered a concealment of assets and you can be charged with bankruptcy fraud.
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Pay creditors with your inheritance. If you filed for Chapter 7 bankruptcy, your inheritance will be used to pay off your creditors. If you filed for Chapter 13 bankruptcy, the inheritance amount will cause a readjustment to your repayment plan developed with your creditors.
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Receive any remaining funds. Once your creditors have been paid in full, if there is money left over in your inheritance, you will receive the remainder. Your inheritance can allow you to get back on your feet financially.
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