Can Bankruptcy Stop Me From Keeping My Inheritance?
Once you decide to file for bankruptcy, you need to consider several things before and prepare for all the effects of bankruptcy. For example, you need to consider the fact that a bankruptcy can stay on your credit report for up to ten years. However, please note that it is not true that filing bankruptcy will ruin your credit forever. Even though bankruptcy can damage your credit score, you can repair the damage.
You also need to consider how bankruptcy will affect your assets. In Pennsylvania, bankruptcy filers are allowed to keep exempt assets. Usually, filers have the chance to choose between federal and state exemptions. In most cases, people select federal exemptions. Regardless of which exemptions you choose, you must stick with the set of exemptions you choose. Generally, you cannot mix exemptions.
While thinking about how bankruptcy affects assets, you might find yourself thinking about how a Pennsylvania bankruptcy can affect your inheritance. In the case of a Pennsylvania Chapter 7 bankruptcy, you might be wondering whether the bankruptcy trustee will take away your inheritance and use it to pay back creditors. On the other hand, if you just filed or are thinking of filing a Chapter 13 bankruptcy, you might be wondering whether your inheritance will be taken into consideration when it comes to your repayment plan. Below, we will attempt to explain how bankruptcy affects inheritance in Pennsylvania.
Is Inheritance Exempted Under Pennsylvania Exemption Laws?
Pennsylvania exemption laws do not explicitly exempt inheritance. However, after receiving your inheritance, you can take advantage of the state’s exemption laws to protect exempt property. If, for example, you inherited personal property such as clothing, you can protect it by using the Pennsylvania personal property exemption. On the other hand, if federal laws allow you to protect your inherited property, yet Pennsylvania exemption laws don’t allow you to do that, you can use federal exemptions to protect your inheritance. It would be best for you to let a bankruptcy attorney help you choose the set of exemptions to use to avoid making the wrong decision.
The 180-Day Rule
Suppose you receive non-exempt property as an inheritance within 180 days of filing for Chapter 7 bankruptcy; in that case, the bankruptcy trustee may liquidate the inheritance and use the funds to pay off creditors. However, if you receive an inheritance after 180 days have passed, the trustee will not sell your inheritance, regardless of whether it is non-exempt or exempt, because it is not property of your bankruptcy estate.
When it comes to a Chapter 13 bankruptcy, receiving an inheritance often means an increase in the amount a debtor must pay back to their creditors. Generally, you need to match a non-exempt property with payments. For instance, if you receive non-exempt property worth $4,000, you will need to match it with $4,000 in payments. Nevertheless, you’ll not need to pay that amount at once. You’ll make the payment over time because Chapter 13 offers you a chance to make payments over time and according to your repayment plan.
Contact Us for Legal Help
If you need more information on what happens to your assets in bankruptcy or are considering filing for bankruptcy, contact a skilled and Lehighton & Carbon County bankruptcy attorney from the Law Office of Adam R. Weaver, Esq, to receive legal help today.