Home > Research Legal Advice > Bankruptcy / Debt > I need to file chapter 7 bankruptcy , but I inherited $18000 last month....
Asked about 1 year ago - Armonk, NY
FlagI am a single person and have no assets. House is WAY underwater. No car. no job. And lots of debt. I want to file ch. 7 and have a fresh start. However last month I inherited about $18000 from an aunt who passed away a few weeks ago. Can I use exemptions to protect this money? How much? Any advice appreciated!
To be honest I would use that money to live on until you can secure employment. I agree there is no rush to file bankruptcy in your situation. Consult a local attorney if you are still uneasy but there is not enough exemptions to cover the 18k and if you file now most of it will end up being disbursed to your creditors and you'll still be unemployed with no safety net. I hope this helps you make a wise decision regarding the overall situation.
Although exemptions can protect property, exemption planning can be very tricky. One mistake & you may blow your money away. So I would urge you to play it safe & consult with an experienced bankruptcy attorney in your community for advice before you jump off the cliff into Chapter 7 bankruptcy.
Hope this perspective helps!
There are a few things you can do to protect the money.
If you haven't received the money yet, and the executor still has control over the property, you may be able to arrange to place the money into a bank account titled into a trust with you as a beneficiary. This would keep the money OUT of your possession and while income received from the trust would be counted against you, the money remaining inside the trust would not be accessible by creditor or the IRS, and you can possibly arrange the tust so that you have enough to fund basic living costs
Exemptions, as mentioned above, can protect much of your inheritance through various exemptions. It takes someone with experience, but it isn't all that difficult to maximize your exemption amount.
Finally; if you house is upside-down (the outstanding loan is higher than the value of the home) then it may be time to attempt to short-sell the home and step away - and downsize into a smaller living space.
Definitely talk to an attorney (quickly) before paying ANY more on your debts.
Don't speak legalese? We define thousands of terms in plain English.
Browse our legal dictionary
