Over the past few weeks, we've talked extensively about how individuals might inherit various assets and the importance of managing estates to ensure all assets -- even intellectual property rights -- are accounted for and passed on to heirs. But what happens if you inherit something of value while you are in the bankruptcy process? The required actions depend on the value of the items you are inheriting, how you inherit them, and where in the bankruptcy process you are.
If you are just considering filing for bankruptcy, know that you will have to disclose all of your assets. That includes any inheritance you are expecting to receive soon. If you are filing Chapter 7 bankruptcy, all or part of your inheritance might be used to pay off creditors. If you are filing Chapter 13 bankruptcy, the inheritance might be used in calculating income for the purposes of your debt payment plan.
If you filed Chapter 7 bankruptcy and the process has been completed and all your debts were discharged before you found out about the inheritance, then it's likely that the inheritance will not be considered in the bankruptcy. If you filed Chapter 13 and you are in the middle of your repayment plan, however, you might have to report the inheritance as a change in income to the trustee, assuming the inheritance is of a sizable.
Inheriting something and dealing with an estate can be a complex matter, as can bankruptcy. Our firm understands that both issues can be stressful and difficult to understand, which is why we offer experienced advice and legal service for those who want to find out more about bankruptcy.