There are things in life we simply cannot plan for or anticipate when they’ll occur. While you may have been in the midst of your Chapter 7 or Chapter 13 bankruptcy case, a loved one passes, leaving you with an inheritance. You may wonder, is that money yours to keep or part of the bankruptcy estate? The answer depends on timing. The Jones Law Firm explains how bankruptcy impacts your inheritance.
What is the 180-Day Rule?
When filing for bankruptcy, there are many rules and regulations for property and asset exemptions
. While you may think that anything acquired after the filing has begun is yours to keep, the reality is not so. The 180-day rule
was enacted by Congress to discourage people from filing for bankruptcy if they know they soon will receive a significant inheritance or have already received an inheritance. The rule works like this: If you receive an inheritance within 180 days from the date that you file for bankruptcy, you likely will not be able to keep it. Also, depending on the timelines, the value of the inheritance, etc., it may impact your repayment plan in a Chapter 13
bankruptcy case. If you are concerned about how the 180-Day rule may impact your bankruptcy filing, here is what you need to know:
- If you received the inheritance before filing for bankruptcy: You will need to review exemption laws pertaining to your case to see if your inheritance is protected or not, or to what value you may be able to keep.
- If you received an inheritance more than 180 days after the bankruptcy filing date: The inheritance won’t be considered part of the bankruptcy estate.
- If you received an inheritance within 180 days of the bankruptcy filing: The inherited assets will be part of your bankruptcy estate and will need to be amended in any bankruptcy paperwork. In addition, your trustee will be able to take any non-exempt portions of the inheritance and use it to pay back creditors.
It is important to know that in many cases, the entitlement date for the inheritance would be the date the person passed away--not the day you collect the inheritance. This can complicate the bankruptcy filing, which is why it’s important to have a trusted bankruptcy attorney to guide you through the process.
Bankruptcy and Inheritance in Ohio: The Jones Law Firm
If you have recently filed for bankruptcy or are planning to and have received a large inheritance, we can help. When it comes to filing for bankruptcy in Columbus and central Ohio, you need to know what options are available to you and how bankruptcy will impact your right to inheritance. Learn more about how The Jones Law Firm can help you by contacting us
for a free consultation about your options.