Keeping Your Inheritance in Bankruptcy
You may be able to keep an inheritance in Bankruptcy or funds from a lawsuit if you know how to exempt it or if you know how to time the filing of your bankruptcy. Whether you file for a Chapter 7 or a Chapter 13 bankruptcy can also determine whether or not you keep property. You start life over after with a certain amount of property by filing exemptions to keep it. Exemptions are large under Kentucky and Federal rules. But, you have to know how to file bankruptcy and also when to acquire property. Inheritances acquired within 180 days after filing a petition are property of the estate under 11USC §541(a)(5)(A) in a Chapter 7 case.
For Chapter 13 cases, the estate includes everything in §541, plus all property acquired by the debtor after filing a Chapter 13 but before the Chapter 13 is closed under 1306(a)(1). §1325(b) requires all of a debtor’s “disposable income” be applied to make payments. Property acquired during a Chapter 13 may be used to pay creditors if it can’t be exempted.
Property includes other property you acquire such as:
- lottery winnings – In re Koonce, 54 BR 643 (Bankr DSC 1985)
- law suit settlements, insurance settlements, – In re Nott, 269 BR 250, 257, 258 (Bankr. MD Fla 2000) and In re Euerle, 70 BR 72 (Bankr DNH 1987) and
- large gifts or loans – Doane v Appalachian Power Co, 19BR 1007 (Bankr WD Va 1982)