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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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What if anyone were to get a monetary gift, won the lottery,

Customer Question

What if anyone were to get a monetary gift, won the lottery, or was a beneficiary to an inheritance they did not know about after their bankruptcy was completed and finalized; do they now have to pay their creditors back even though the bankruptcy is completed already? Or is it too late for the creditors to go after them?
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 3 years ago.

Hi JACustomer,

1) Cash gifts that a debtor receives after a Bankruptcy is filed do not become part of the Bankruptcy estate.

2) If the lottery ticket was purchased before the Bankruptcy was filed, the winnings become part of the Bankruptcy estate. If the ticket was purchased after the Bankruptcy was filed, the winnings do not become part of the Bankruptcy estate.

3) An inheritance that the debtor becomes entitled to within 90 days after the filing becomes the property of the Bankruptcy estate. "Becomes entitled to" means the date the deceased died. If the death occurs more than 90 days after the Bankruptcy is filed, that inheritance does not become part of the Bankruptcy estate.

 

I think this is what you wanted to know. If not, please let me know.
Thank you!

 

Customer: replied 3 years ago.

About the inheritance, you did not fully answer my question. I asked you, if you found out you were entitled to an inheritance YOU DID NOT KNOW ABOUT after the bankruptcy was completed? In other words, your bankruptcy was all completed, done and over with and then you receive a call or a letter from someone saying you inherited some money. Does the same rules apply even if you did NOT KNOW about the inheritance until after the bankruptcy was completed.

Expert:  cfortunato replied 3 years ago.

Yes - the same rules apply even if the debtor did not know about the inheritance until after the Bankruptcy is filed and closed. If the person from whom the debtor will receive the inheritance died at any time before 90 days after the Bankruptcy was filed, the inheritance becomes part of the Bankrutpcy estate.

 

Customer: replied 3 years ago.
If someone where in that situation where they found out they got an inheritance they did not know about after the bankruptcy was completed, could that person give the entire inheritance to someone else, so it is not their's anymore OR can that person open up a trust account for a child(son or daughter) and give the entire amount to one of the children in the childs name? If this is ok to do this, and the person filing(or filed already) for bankruptcy does one of those things, is that person still responsibe for paying their creditors back, even though they do not have the inheritance anymore?
Expert:  cfortunato replied 3 years ago.

How would the creditors find out about the inheritance?

Customer: replied 3 years ago.
I don't know how the creditors would find out about the inheritance unless someone tells them. Could the creditors find out in any way if nobody tells them? I know someone who is in this situation that can not speak english very well so I'm trying to help that person by contacting you. This person I know filed and completed his bankruptcy already and just found out after, he is entitled to an inheritance. He does not have it yet. It is in someone elses name. He doesn't want the creditors to take his inheritance away from him(that why I asked you the question about giving it away, if thats what he should do?). What is your advice to do now?
Expert:  cfortunato replied 3 years ago.

Are any of the creditors family members or friends?

Customer: replied 3 years ago.
No, they are credit card company's and a Home Equity Loan(line of credit) and some medical bills.
Expert:  cfortunato replied 3 years ago.

If there none of the creditors are family members or friends, it is unlikely that the creditors will find out about the inheritance - especially if it is not in his name.

Additionally, there is no obligation on the debtor's part to inform the Bankruptcy court about it. This is because at the time of filing the debtor did not know about the inheritance, so could not report it.

 

 

Customer: replied 3 years ago.
That sounds good, but I'm still confused. I thought you said earlier that the same rules apply even when the debtor did not know about the inheritance until after the bankruptcy was filed, closed and completed(that the inheritance becomes part of the bankruptcy estate)? The person I'm helping told me when he found out about the inheritance(which was after the bankruptcy was completed), the person that died and left him an inheritance died before he started the bankruptcy process, but he did not know about it unltil after the bankruptcy was completed. The person I'm helping just wants to make sure the creditors or the bankruptcy court can not find out about his inheritance, and can they garnish his wages from his bank account at any time? What do you think?
Expert:  cfortunato replied 3 years ago.

The same rules apply to the inheritance regardless of when the debtor finds out about it. There is no duty on the part of the debtor to inform the Bankrutpcy court about the inheritance after the trustee meeting (about one month after filing). This rule remains the same regardless of when the debtor finds out about the inheritance.

Creditors cannot garnish his wages at any time because of his inheritance.

Customer: replied 3 years ago.
So what you are saying is that the debtor is safe now, and he can legally do what he wants to with his inheritance money, and not have to worry about his creditors going after him anymore? Thank you in advance for all your help!
Expert:  cfortunato replied 3 years ago.
Yes - I do believe he is safe and does not have to worry.
Customer: replied 3 years ago.
Ok great. Just one more thing. Is there a specific time frame he should or has to wait before he accepts his inheritance money? FYI-(His bankruptcy was completed about one and a half months ago then he got a call about a week and a half ago informing him he's a beneficiary to an inheritance.) Thank you!
Expert:  cfortunato replied 3 years ago.

No - there is no specific time frame he needs to wait before accepting the money.

Expert:  cfortunato replied 3 years ago.
Hi again,
Please let me know if you have any further questions.
If not, please don't forget to hit the "ACCEPT" button.
Thank you!
Expert:  cfortunato replied 3 years ago.

Just did some additional research. A debtor is supposed to inform the trustee about money or an asset that is obtained after a Bankrutpcy is filed, if that money or asset would have been part of the Bankrutpcy estate if the debtor had the money at the time the Bankrutpcy was filed. Bankruptcy Stat. 727(d)(2).

 

 

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