Upon surrendering an inheritance received within the 180 day window following a Chapter 7 discharge are both unsecured and secured creditors paid and is any remaining funds returned to the debtor?
Toms River, New Jersey
I am trying to establish both my responsibility and rights under NJ law concerning a pending inheritance and how the funds will be utilized by the trustee. Also, only my unsecured debts were discharged.are those the creditiors that will be paid or will my mortgage company (secured) also receive funds those my payments are current? Are any remaining monies refunded to me at the end of the disbursement and associated fees?
Hello,The funds received by the Chapter 7 trustee, will pay the creditors on a pro rata basis. Since your mortgage is up to date and secured, it would typically not share in the distribution. Any excess funds would be paid to you after trustee fees and costs. Under some circumstances a beneficiary/debtor may be able to disclaim an inheritance. In such an instance, the inheritance would pass to the contingent beneficiary as if you had predeceased. You may want to consider investigating this possible alternative with local counsel.
Bankruptcy Lawyer. Experienced.
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