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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 38552
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I filed Chapter 7 bankruptcy in July. In August, my father

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I filed Chapter 7 bankruptcy in July. In August, my father died unexpectedley and I received an inheritance. Most of his assests were listed with me as the POD. I notified the court and yet, my bankruptcy was discharged a few days ago. Now, the trustee is demanding I give him 3.5 times the amount I actually owe my creditors. My creditors have until November 30th to file a claim with the trustee. Is there anything I can do - can I go out and just pay my creditors myself or can I refuse to give him more than I know I owe.
Under Bankr. Code 541(a)(5)(A), the trustee is entitled to "Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date--(A) by bequest, devise, or inheritance."

The express terms of the statute demonstrates that the trustee can demand that you turn over the entire inheritance. If you refuse, then under Bankr. Code 727(a)(2)(A), the trustee can ask the court to revoke your entire bankruptcy discharge.

In order to actually force you to turnover the property, the trustee needs a court order, and you can reasonably object to the amount demanded as being unnecessary to satisfy your outstanding debts. It does seem rather overreaching for the trustee to demand more than the exact money required to satisfy the creditors and pay the trustee's fees. However, as previously mentioned, the trustee can demand it all, at least, based upon the express language of the Code.

On the other hand, if you fight about the amount you decide to turnover, then you will owe fees to your lawyer -- whereas if you simply turnover the amount requested, the trustee must pay your creditors promptly and then return any remaining assets to you.

So, it may actually be cheaper in the long run to do as the trustee asks, unreasonable as that may seem.

Hope this helps.

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