Hi. Matt MacArthur, bankruptcy attorney at Clear Counsel Law Group.

Our office recently received an e-mail inquiry, asking the question about whether or not they would be able to keep an inheritance, that they were looking at receiving unexpectedly, while they were in the middle of a Chapter 13 Bankruptcy.


The General Rule Regarding an Inheritance

The general rule in Chapter 13 Bankruptcies is that disposable income of the person that person that's filing for bankruptcy, needs to be made available to pay back the creditors. In other words, if you have enough money to pay back your creditors, you need to pay everything that you can.

If you're at the point, where you're paying them back in full, then that is sufficient. You don't have to pay more than what you owe, going in.

This individual's inheritance was quite substantial. The question that they were faced with was, are they going to lose the whole thing? Are they going to lose part of it? Or is there any way to stop the bankruptcy from taking any of it at all?

To first address this question, it's important to keep in mind that in a Chapter 13 Bankruptcy, an individual has the right to dismiss their case at any time.

One of the first things that I would advise this person, is that if the amount of the inheritance is too a level where it no longer makes sense to stay in your bankruptcy and continue on the Chapter 13 plan, than you should dismiss your case, stop the bankruptcy process.

You'll be able to keep the whole inheritance and then you can deal with your creditors, that haven't been paid yet, on your own, outside of the bankruptcy court process.


inheritance, chapter 13 bankruptcy


Whether they would be able to keep the inheritance as part of their bankruptcy if they continue on the path, depends on a number of factors. It depends whether creditors are on track to receive a full payment during the life of the bankruptcy plan. Or if they're not on track to receive a full payment, based upon what the normal, proposed monthly payment plan provide for.

Whether or not the inheritance is sufficient to pay off the remaining amount owed to the creditors or not.

There's a number of factors that need to be considered.


Given the Complications With Inheritance, I Offer a Free Consultation

This can be a very complicated, technical situation to parse through and if you're in a Chapter 13, if you're looking to receive an inheritance, please come and see the Clear Counsel Law Group.

We not only have very excellent bankruptcy attorneys on staff here, we have a top notch estate planning and probate department, that can help you weed through the issues of receiving an inheritance and how that inner-plays with the bankruptcy process at a level that you may not be able to receive in other law offices.

My name is Matt MacArthur. Please come and see me, if you're considering bankruptcy, if you're looking to receive an inheritance, if you're at all concerned about any of these issues, I'd love to sit down and meet with you. The consultations are free, so you have no excuse not to come in.

Hope to hear from you soon.


Clear Counsel Law group

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