Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
Yes - the Bankruptcy court does honor spendthrift clauses in trusts. If the Bankruptcy filer is the beneficiary of a trust that has a spendthrift provision, that trust will be exempt (protected) from the Bankrutpcy court.
I think this is what you wanted to know. If not, please let me know.Thank you.
what would happen if I was in the middle filing Chapt 7 and the asset is sold or the person in the living trust passes and the cash is in my account?
Once the asset is sold, then the Bankrutpcy court can take the money that the asset is sold for. The asset loses its protection once it is sold.
At what point in the Chapt 7 filing would the bankrutpcy court not take it? Once I file?