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Elizabeth Prentice
Elizabeth Prentice, Attorney
Category: Bankruptcy Law
Satisfied Customers: 170
Experience:  Managing Attorney for one of the largest consumer bankruptcy firms in America.
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We filed chapter 13 a year and a half ago and last June my

Customer Question

We filed chapter 13 a year and a half ago and last June my husbands grandmother died 6 months later in June and left him inheritance now the trustee is threatning to file a chapter 7? Why? And could they take his money? The estate is not even closed yet and we only have 18 months left to pay and we have never been late
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Elizabeth Prentice replied 1 year ago.
I am a bankruptcy attorney and I would be happy to assist you. In a Chapter 13, a change in your income (ex- a new job or inheritance) can change your plan payment and the amount you must repay to creditors in the plan. The consequences of receiving the inheritance also depend on whether the property is exempt. If the inheritance is from a life insurance policy, then it will exempt in Kansas under Code 40-414(a). If it is merely money left for you, it will not be exempt. Personal property (ex- jewelry) may also be exempt.

As you are aware, you don't have to give up your property in Chapter 13; instead, you make monthly payments to be divided among your creditors, as part of your Chapter 13 repayment plan. How much you have to pay into your plan depends, in part, on your nonexempt property. Your unsecured creditors (those holding debts that aren't backed by collateral) are entitled to be paid at least as much in Chapter 13 as they would have received if you had used Chapter 7: the value of your nonexempt property. So, if you receive an inheritance at any time during your 3 or 5 years that isn't exempt, you will have to add its value to what you repay to your unsecured creditors, which will increase your plan payments. (If the property is exempt, it has no effect on your repayment plan.) Your attorney needs to amend Schedule B, C & the Plan or the Trustee will file a Motion to potentially dismiss or convert your case to Chapter 7.

If you inherit more than 180 days after you file, the consequences may differ in a Chapter 7. A Chapter 7 trustee cannot claim the inheritance in this case; it's yours to keep, whether or not the property is exempt. In a Chapter 13 filing, however, the judge may take an inheritance into account, even if more than 180 days have passed since you filed, when deciding on a motion by the trustee or a creditor to require you to amend your plan. This can happen when your income and assets increase for any reason during the repayment plan period, from three to five years.

Therefore, make sure your attorney amends schedules B & C and the plan right away to figure out what can be protected on Schedule C and how much your new plan payment will become.

I hope my answer has assisted you and that you will leave me a positive rating! If you need any future questions answered, please feel free to ask for me by name.

Customer: replied 1 year ago.

My husband received and IRA which he just rolled over and his grandmother left him a house to him and his brother which was sold but since the estate has not been closed he has not received any money yet. So they want to convert us to a chapter 7 when he has not even received any money????

Expert:  Elizabeth Prentice replied 1 year ago.
The IRA is protected as exempt in Kansas pursuant to Kan. Stat. Ann. § 60-2308 (b). However, the proceeds from the sale of the home is not. Therefore, Schedule B needs to amended to list both and C needs to be amended to exempt the IRA. Then your plan must account for paying back the entire amount of the house proceeds to the unsecured. It must be amended and refiled. The trustee typically will file a Motion to Dismiss or Convert to Chapter 7, if your attorney fails to do the foregoing. If you have received such a Motion in the mail from the trustee, do not worry unless your attorney tell you to. The attorney is given time before the hearing on the motion to correct the issues in your bankruptcy. Therefore, make sure you meet with your attorney as soon as possible to confirm these issues are being handled. There is no rule which prevents you from contacting the Chapter 13 trustee's office to answer your questions. Feel free to call them and explain your concerns, as well as the fact that you have not yet received any proceeds from the sale but that you are more than happy to turn them over if you are required per the law. After you have done this, the trustee will typically extend the date of the hearing on his motion to give you more time to comply.

I hope my answer has assisted you and that you will leave me a positive rating! If you need any future questions answered, please feel free to ask for me by name.
Expert:  Elizabeth Prentice replied 1 year ago.
Hi, How are you doing? Have you remembered to rate my answer? If not, please make sure you do, so that I may receive proper credit. If there is anything else I can help you with, please let me know.

JustAnswer Expert,
Expert:  Elizabeth Prentice replied 1 year ago.
I see that you have forgotten to rate my answer. If you would do so now it would be greatly appreciated, so that I may receive credit for my time researching law and assisting you!

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