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JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience:  Attorney in the practice of Bankruptcy Law since 1996
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I was preparing to file for bankruptcy when I was notified

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I was preparing to file for bankruptcy when I was notified that my biological father had been killed. While we were originally told that there was a will and no inheritance left in my name, we were recently notified that there was no will and his estate would be settled in probate and I may be a beneficiary. There is no guarantee I will inherit anything, however, I'm unsure how to proceed. What are my options in this situation?
<p>If you are a beneficiary by intestate succession (no Will), then your rights are already vested, and a bankruptcy will deliver those rights straight into the hands of the bankruptcy trustee and your creditors. So, if you file bankruptcy, now, you're scr****, unless you disclaim your rights in the estate, and the other beneficiaries later gift what would have been your portion after the bankruptcy is discharged. </p><p> </p><p>And, if the trustee were to discover this plan, then you and your co-conspirators would be headed straight to federal prison for bankrutpcy fraud. So, if you think you can pull off this little "hat trick," I don't want to know about it, and you don't want to discuss a word of it with anyone -- especially not online!</p><p> </p><p>Hope his helps. </p><p> </p><p class="text-13-black" align="left"><u>Terms and Conditions</u>: By your continuing in this conversation with me, or by your clicking “<strong><u>Accept</u></strong>”, you are expressly agreeing to all of the following: (1) our communication is for entertainment purposes only; (2) you are not consulting me in my professional capacity as an attorney; (3) you do not seek to establish an attorney-client relationship with me, nor do I with you; (4) you will not rely on anything I say and you will obtain appropriate legal counsel via a traditional/office consultation with an attorney licensed to practice in the jurisdiction where your legal issue arises (and you may not use our communication to avoid taxpayer penalties imposed by the U.S. Dept. of Treasury); (5) by communicating with me in this public forum you are irrevocably waiving any right to privacy, confidentiality and attorney-client privilege concerning the matters discussed. You further separately declare that any payment made by you is not consideration for this contract, nor offered for any services rendered by me on your behalf, but rather is made in genuine admiration and respect for my desire to help others. If you do not agree with these terms and conditions, then you must advise me immediately.</p>
Customer: replied 7 years ago.
Relist: Answer quality.
Answerer assumed I was meaning to go through illegal means and did not answer my question to an acceptable degree. 80% of provided answer was disclaimer.
Hi Farmgirl:

Normally, if you are entitled to inherit anything, or if you become entitled to inherit anything within 6 months after a bankruptcy case, the Bankruptcy Court can take your inheritance and give it to your creditors (see 11 U.S.C. 541(a)(5)(A), HERE). You can still wipe out your debts, but you will lose you inheritance to do it.

One option is disclaimer: this is where you "disclaim," or surrender your right to inherit anything. Inheritance which is properly disclaimed may not be pursued by the Bankruptcy Court, but also may never be later obtained by you, without facing severe, potentially criminal, sanctions.

Disclaimer is very tricky and you would want to enlist the services of an estate attorney to ensure that you properly disclaim the inheritance. This is tough since, until you know how much you are inheriting, you won't know if it is worth the money to hire an attorney. You can read more about disclaimer and its relationship to bankruptcy by going HERE.

So, what I think is a more commonly made choice is to wait until the inheritance is received before filing bankruptcy, then decide whether bankruptcy is still a viable option. In other words, if you get enough money to pay off or settle your debts (which normally takes around 40% of the balance of unsecured debts), then you may not need to file bankruptcy at all. If not, you can consider bankruptcy down the road.

If however you need to file bankruptcy immediately, perhaps to avoid a writ of attachment, garnishment, foreclosure, etc, then without a crystal ball you will not really know what to do: if you file bankruptcy and inherit a lot of money, you will lose it, but if you wait to file bankruptcy to see how much you inherit and in the meantime you lose your home to foreclosure, then inherit $500, you will be equally miffed.

I wish I had better direction than that, but your question really is a tough one considering that you don't know how much money you may be inheriting. One thing to consider though, is that if you inherit enough money to pay everything off plus some, the Bankruptcy Court will only take the amount needed to pay off the debts plus pay the court fees (trustee fees), and you should get the rest of the money beyond that.

I'm not sure if i answered your question, so if not please feel free to follow up. I hope this helps and a positive feedback is always appreciated if this was useful to you.

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JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience: Attorney in the practice of Bankruptcy Law since 1996
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