INHERITENCES THAT THE DEBTOR RECEIVES

If the debtor receives an inheritance or an interest in property paid through a life insurance contract within 180 days of the filing of the bankruptcy petition, the debtor is required by law to file amended schedules disclosing the inheritance.  If there is an exemption in the debtor’s state that covers this type of property, the debtor may amend the schedule of exemptions in order to claim the appropriate exemption.  Debtors should be aware that in Chapter 7 cases, if there is no applicable exemption covering this property, the trustee may take this property to pay the debtor’s creditors.  If the debtor fails to notify the debtor’s attorney, the trustee and the Bankruptcy court, the debtor could have his or her discharge revoked or even be charged criminally for hiding assets.  There is a strict 180 day limit, meaning if the debtor obtains an interest in an inheritance or life insurance policy on the 181st day after the bankruptcy case was filed, the trustee cannot take the inheritance from the debtor.

 

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Justin M. Myers Attorney-At-Law, LLC

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