Normally, if you are entitled to inherit anything, or if you become entitled to inherit anything within 6 months after a bankruptcy case, the Bankruptcy Court
can take your inheritance and give it to your creditors (see 11 U.S.C. 541(a)(5)(A), HERE
). You can still wipe out your debts, but you will lose you inheritance to do it.
One option is disclaimer: this is where you "disclaim," or surrender your right to inherit anything. Inheritance which is properly disclaimed may not be pursued by the Bankruptcy Court, but also may never be later obtained by you, without facing severe, potentially criminal, sanctions.
Disclaimer is very tricky and you would want to enlist the services of an estate attorney to ensure that you properly disclaim the inheritance. This is tough since, until you know how much you are inheriting, you won't know if it is worth the money to hire an attorney. You can read more about disclaimer and its relationship to bankruptcy by going HERE
So, what I think is a more commonly made choice is to wait until the inheritance is received before filing bankruptcy, then decide whether bankruptcy is still a viable option. In other words, if you get enough money to pay off or settle your debts (which normally takes around 40% of the balance of unsecured debts), then you may not need to file bankruptcy at all. If not, you can consider bankruptcy down the road.
If however you need to file bankruptcy immediately, perhaps to avoid a writ of attachment, garnishment
, foreclosure, etc, then without a crystal ball you will not really know what to do: if you file bankruptcy and inherit a lot of money, you will lose it, but if you wait to file bankruptcy to see how much you inherit and in the meantime you lose your home to foreclosure, then inherit $500, you will be equally miffed.
I wish I had better direction than that, but your question really is a tough one considering that you don't know how much money you may be inheriting. One thing to consider though, is that if you inherit enough money to pay everything off plus some, the Bankruptcy Court will only take the amount needed to pay off the debts plus pay the court fees (trustee fees), and you should get the rest of the money beyond that.
I'm not sure if i answered your question, so if not please feel free to follow up. I hope this helps and a positive feedback is always appreciated if this was useful to you.LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Fees I receive for answering questions are paid for information, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. Joseph Ross does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) Joseph Ross. All rights reserved.