Due an inheritance? It could affect your Greensboro bankruptcy
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All assets have the potential to impact your Greensboro bankruptcy case, including an inheritance you already received or one you expect to receive. Here’s how an inheritance will affect Chapter 7 and Chapter 13 North Carolina bankruptcy cases and what you should do to prepare yourself to get the best results in your bankruptcy case.
How an Inheritance Impacts a Chapter 7 Case
If you choose Chapter 7 for your Greensboro bankruptcy, the timing of the inheritance is all-important. With Chapter 7, knowing that you are someone’s heir and will receive an inheritance only matters if the person has died and the money just came to you or is due soon. For instance, if you know your grandmother is leaving you $10k, but she hasn’t passed yet, this is not your asset yet, so it’s immaterial.
However, in the same situation, if your grandmother passes and you inherit within six months from the date you filed your Greensboro Chapter 7 bankruptcy, then it is considered an asset of your bankruptcy estate and could impact your case after the fact unless you have enough exemptions to protect the inheritance. The nature of the inheritance determines how you may apply the exemptions.
North Carolina allows you to shield some cash in the bank and also offers a “wildcard” exemption. If the inheritance consists of some material assets and some cash, you might be able to use a variety of bankruptcy exemptions to shield all or some of the inheritance. Your bankruptcy attorney can best advise you and should be notified as soon as you know the inheritance is coming your way.
If you receive an inheritance before filing your Greensboro bankruptcy, it might also weigh in your case depending on how you used the money. With the same scenario of $10k inherited, if you were already insolvent, but used some of the money to pay off one particular creditor just before you filed bankruptcy, the Trustee might consider it a preferential payment and recover it from the creditor.
If you receive an inheritance from an event that occurred after six months from the date of your Greensboro bankruptcy filing, you should be fine, but it’s best to consult your bankruptcy attorney just to make sure you’re in the clear to use the money at your discretion.
How an Inheritance Impacts a Chapter 13 Case
Because Chapter 13 bankruptcy takes three to five years from start to finish, it is more complicated when it comes to an inheritance. If you receive an inheritance any time that you are in a Greensboro Chapter 13 bankruptcy repayment, that asset will become part of your assets in the case. Depending on the amount inherited, your debt, income, and repayment plan, it might not affect your case.
Again, as soon as you become aware that you will receive an inheritance because someone passed away and left you as a beneficiary, you should notify your bankruptcy attorney if you’re already in the Greensboro bankruptcy process. The safest course of action while in the repayment period is to always consult with your lawyer about changes in your income, assets, or expenses while in the repayment period.
The Penalty for Non-Disclosure of an Inheritance
Anytime you hide information about your assets, income, or debt during the Greensboro bankruptcy process, it can come back to haunt you later. Bankruptcy fraud can lead to jail time, as in the recent case of "Dance Moms" star Abby Lee Miller who will spend a year and a day behind bars for fibbing to the court in her Pittsburgh bankruptcy case.
The rule of thumb is to be totally transparent with your Greensboro bankruptcy attorney. Only with complete information can they give you the best advice and work to get you the best result from your Chapter 7 or Chapter 13 case. Bankruptcy is debt protection allowed under the law, but you must abide by the law in exchange for the privilege of debt relief.
To find out more about the benefits of Greensboro bankruptcy, contact the Law Offices of John T. Orcutt. Call +1-919-646-2654 now for a free consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.