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VanDLaw, Attorney
Category: Bankruptcy Law
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Experience:  Chapter 7 & 13
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I am considering declaring bankruptcy due to overwhelming outstanding

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I am considering declaring bankruptcy due to overwhelming outstanding debts. My sister is the Trustee over my inheritance from my deceased mother and controls all of the money from that inheritance. I have no direct access to any of that money. If I declare bankruptcy, can the amount I owe in debts be taken from the trust? Would it be possible to REQUEST that the amount I owe be paid for by the trust if I declare bankruptcy?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  VanDLaw replied 7 years ago.



If the Trust has a spendthrift provision your Trust is protected from the reach of creditors and bankruptcy proceedings. It needs to be very clear in the Trust document so you would need to take the Trust document to your Bankruptcy attorney for them to review carefully. Otherwise, if you file bankruptcy the Trustee is going to reach in and take the money from the Trust to pay your creditors.


You should discuss with your Trustee getting payment from your Trust before filing bankruptcy. They will try and go after it anyway, and any money you receive from it will be counted as income for the means test. If the money is there, you should get out of debt through your Trust, there is no reason to have a bankruptcy on your credit file.

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