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Rose is about to file bankruptcy when she learns that she has

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Rose is about to file bankruptcy when she learns that she has the winning state lottery ticket for $6.4 million. At the time, her assets were $250,000 and her obligations were $1.6 million. She gives her sister, Mary, the ticket and asks her to claim the prize money. After Rose filed bankruptcy, Mary has been giving her "gifts".

Can anyone provide the law regarding the transfer of lottery tickets knowing that he/she is is about to file bankruptcy?

In this situation, does Mary own the lottery ticket? Please supply the law regarding this.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  LawHelpNow replied 5 years ago.
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QUESTION: "Can anyone provide the law regarding the transfer of lottery tickets knowing that he/she is is about to file bankruptcy?"

ANSWER: Sure, gladly. Rose is on some rather shaky ground. Here is how this works. There is a sneaky little animal called the "180 Days Rule". It means that in case of a sudden windfall, such as lottery winnings, Rose could lose her earnings even up to six months after the date of her bankruptcy discharge. So, that is one important issue in this scenario. Another is that failing to be completely honest could subject Rose to the Trustee moving for revocation ("undoing") of her bankruptcy discharge. In fact, depending upon just how far things go, Rose could be facing the prospect of a criminal prosecution alleging bankruptcy fraud. Keep in mind that while bankruptcy is primarily a matter of federal law, there is also some overlap or interplay of state law such as in that exemptions differ in amount of type by state jurisdiction and so forth. This law can be found at 11 U.S.C. § 523.

QUESTION: "In this situation, does Mary own the lottery ticket?"

ANSWER: At first blush, it would indeed appear that Mary is the lawful owner of the ticket. However, upon further analysis, depending upon her knowledge of the "real" circumstances she is risking being charged as an accessory. In other words, the "true" owner of the lottery proceeds may very well end up being Rose's creditors and the federal government. This law is found at 18 U.S.C. §§ 2 and 3.

I truly hope all works out for you. After you rate my answer (look for smiley faces and/or stars plus possibly a green "Submit" button), our conversation need not end. I would be happy to continue our dialog, without further charge, until you are fully satisfied. I promise to check back periodically for any updated posts from you each time I return to this online venue.

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