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I filed for chapter 11 bankruptcy in January 2011. Will an inheritance be affected in near future

Union, NJ |

I will inherit a good sum of money upon my father's death. Will this affect my 2011 bankruptcy?
If the money is bequeathed to my spouse, will this protect the money? Even if she filed for chapter 7 in 2010?

Attorney Answers 3

Posted

You left out important facts. You filed a Chapter 11 in 2011, but what happened? Is it still in Chapter 11? Converted to 7 or 13? Dismissed? If it is still in Chapter 11, presumably you still have a lawyer so that is who you need to ask. Property that comes into the estate during a Chapter 11 is generally property of the estate to be addressed in a plan. Do you mean you filed Chapter 13? Please update your post.

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Posted

Mr. Riddle is of course correct. Did your ch 11 case produce a confirmed plan? If so, did it contemplate treating one or more claims with money from this inheritance? The full facts and circumstances are necessary to start on an answer to this question. If still in touch with your ch 11 lawyer, do ask him or her.

The above is meant to be valuable and not harmful. A lawyer intending to help a client or prospective client NEEDS facts. The more facts, the better. This medium, and often the question, do not promote fact gathering as well as an attorney's questions. So this answer is subject to revision based upon more facts. This response does not create an attorney client relationship and is not an attorney client communication. You should obtain advice from independent counsel of your own selection before proceeding. Visit JSCBKLAW.com for more info...

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Posted

If you're posting the question here while you're still in a bankruptcy case then that tells me you don't have any confidence in the lawyer that's representing you, or perhaps he or she is giving you reason to second-guess. It is very rare that an individual files for Chapter 11 bankruptcy. It does happen, but the overwhelming majority of individual bankruptcy cases are filed as Chapter 7 or Chapter 13.

Section 541 of the Bankruptcy Code defines property of the estate, and includes the following:

(5) Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date—
(A) by bequest, devise, or inheritance;

My understanding of Section 541(a)(5) is that if the testator has passed when the petition is filed, or thereafter passes within 180 days of the petition filing, then the inheritance constitutes property of your bankruptcy estate. I don't believe there is a distinction if one chapter of bankruptcy is filed versus another chapter.

This answer does not constitute specific legal advice or create an attorney-client relationship between Glenn R. Reiser, Esq. or LoFaro & Reiser, LLP and the individual or company whose posts we are responding to.

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2 comments

Scott Benjamin Riddle

Scott Benjamin Riddle

Posted

See Section 1115. (a) In a case in which the debtor is an individual, property of the estate includes, in addition to the property specified in section 541 - (1) all property of the kind specified in section 541 that the debtor acquires after the commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 12, or 13, whichever occurs first;

Michael Avanesian

Michael Avanesian

Posted

It also matters if 1129(a)(15) was invoked.

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