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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 38507
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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In 2007 I started accumulating medical bills I could not afford.

Resolved Question:

In 2007 I started accumulating medical bills I could not afford. I retained a bankruptcy lawyer in February 2008 with $800, and stopped paying all my bills, car loan, credit card, medical, etc. Shortly thereafter my financial situation worsened even more, and I was forced to move and look for new work. My health (heart problem) got worse, and I required surgery - even more medical bills. I never completed bankruptcy nor paid the lawyer more than the retainer.

Now, last month my brother died and I am heir to a small estate, valued around $400,000. To this point my income had not exceeded $40K, so I thought I could wait for bankruptcy, or simply wait until the statute of limitations had run out (4 years in CA, where I live).

Now, I don't know if I can still file bankruptcy as I enter probate in AZ (where my bother lived). Also, I'm starting to get calls about my old debt from 2008. If they sue me, can I still file bankruptcy? What to do:) ???

Thanks so much!
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 5 years ago.
If you file bankruptcy now, your rights in the estate will belong to the bankruptcy trustee, and that means all of the estate assets will be available to pay your creditors.

Assuming that you were to, for example, take possession of the estate assets, and then purchase a home in California, and use some of the estate assets to make the purchase, then you could potentially exempt $75,000 from the bankruptcy estate under the California homestead exemption ($100,000 if married/head of household; $175,000 if age 65 or older, or permanently disabled, or 55 or older and income below $15,000/$20,000 if married).

You could put some of the money into a retirement account, to the extent that you would be permitted by federal law, and protect a few thousand more dollars.

The only other way to avoid losing the money to the bankruptcy trustee is to file a "disclaimer" of your interest in the estate. This would have the effect of directing the estate to whomever would succeed you as a beneficiary under your brother's Will. You might be able to make some sort of deal with that person or persons to have them make you a gift of some part of the estate after the bankruptcy is closed. However, you would have to simply trust the other heirs, because if your deal were made enforceable in writing, then that would constitute federal bankruptcy fraud.

You could also, simply leave the USA forever. Most people view this as an unreasonable solution. But, since it's an available option, I'm mentioning it to be thorough.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

Customer: replied 5 years ago.
ToCustomer

Thanks. My sister and other brother are additional benfeciaries to the estate, so I may just rescind my rights and work it out with them, as you noted.

The tricky part here is the timeline - We're looking to open probate next week. But the statute of limitations on my old debt is just weeks away. Do you think I can rescind my rights AFTER we open probate, only if creditors sue me in the next few weeks?

I do like your idea of leaving the USA... Brazil would be nice:)
Expert:  socrateaser replied 5 years ago.
You can disclaim your interest in the estate at any time before the ninth month after the decedent's date of death.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

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