What Happens if I Receive an Inheritance During my Bankruptcy?

If you happen to receive an inheritance during a bankruptcy, your course of action will likely depend on which chapter you filed for. If you filed under chapter 7 whatever happens to your inheritance depends on when you actually inherit the money. If you inherit it before filing you will have to include the inheritance in the bankruptcy estate and use some of your exemptions to try and keep some of that money. If you receive an inheritance within 180 days of filing for bankruptcy then amendments will need to be made to your petition in order to exempt your inheritance. Finally, if you receive an inheritance more than 180 days after filing the inheritance will not need to be incorporated into your bankruptcy estate. If you filed for chapter 13 in most cases you would need to make an amendment to your petition so that you can exempt that money, but if you are in a 36 month plan and you’ve made payments for 36 months you are entitled to receive your inheritance without it being incorporated into the bankruptcy estate.

To better understand if filing for bankruptcy is the right option for you, it would be to your advantage to set up a consultation with a local bankruptcy attorney.

What Can and Cannot be Discharged During Bankruptcy?

The dischargeability of certain debts depends entirely on which chapter the bankruptcy is filed under. If the bankruptcy is a chapter 7 bankruptcy, then there are tighter restrictions on what can and can’t be discharged. Nondischargeable debts in chapter 7 include: most taxes, child support, fines owed to any governmental institution, student loans in most cases, criminal restitution debts, marital property settlement debts, and debts for repayment of loans from pension plans. Chapter 7 as a fresh start is able to completely discharge most forms of unsecured debt excluding the previously mentioned exceptions. Chapter 13 on the other hand is not as restrictive as chapter 7 because in a chapter 13 bankruptcy most of the previously nondischargeable debts should be included within the chapter 13 repayment plan. Nondischargeable debts in chapter 13 include: long-term debts with final payments due after the completion of the plan (e.g. mortgages/vehicle loans), tax debts, debts incurred through fraud, debts that aren't listed in the bankruptcy, child support, drunk driving debts, and most criminal fines and restitution debts.

To better understand if filing for bankruptcy is the right action for you, it is recommended that you set up a consultation with a local bankruptcy attorney.

Should I File for Bankruptcy Jointly With My Spouse?

In general filing jointly is more beneficial than filing separately. These benefits include only having to pay for one filing fee rather than two, having both debtors achieve their discharges simultaneously, and in general maximizing the efficiency of the filing process. The two debtors are not completely consolidated into one case, but much of their estate in terms of joint debts and joint property overlap. There are a few exceptions towards filing jointly however. The most obvious is if your spouse does not want to participate in filing for bankruptcy you can still file individually. Another exception would be if one spouse is unable to file because of a prior bankruptcy, or if both spouses filing would violate the guidelines for either chapter 7 or 13. The most important exception involves protection of nonexempt property, where the spouse who holds most of the nonexempt property doesn’t file while the one who requires the bankruptcy files. This way both spouses avoid having to liquidate their nonexempt property.

To better understand if filing for bankruptcy is the best action for you, it is recommended you set up a consultation with a local bankruptcy attorney.

Bankruptcy "Breather"

            The word bankruptcy tends to have a negative connotation, but this is due to a misunderstanding of the word and what it means to file bankruptcy.  Many people understand bankruptcy to mean that the person filing has lost all of their money.  This confusion can lead to either fear for the person filing or not understanding that you’re eligible to file (because you still have money and/or a steady income source).

The truth about bankruptcy is that it’s a process which allows a person to “take a breather”.  In other words, if a person is overwhelmed with debt and unable to remain current with their payments, filing for bankruptcy will give them a break from creditor harassment, so they can catch up on payments and re-organize their finances.  This process is called the Automatic Stay and it’s something most people don’t understand about bankruptcy.  When a person files for bankruptcy, an Automatic Stay is immediately put in place by the courts.  The Automatic Stay prohibits creditors from taking further action outside the bankruptcy to collect monies that are owed to them from the debtor.  Therefore, the creditors must leave the debtors alone while they reorganize their finances with a trustee, the court, and their bankruptcy lawyer.

               In the end, though bankruptcy can seem like a scary situation, the process of filing is meant to help people through financial hardship and help them to remain out of debt and on top of their finances in the future. For more information about how bankruptcy could benefit you, contact your local Bankruptcy Attorney. 

A Common Misconception

It is a common misconception that an individual is unable to file for relief under Bankruptcy Code if their debt is incurred due to medical expenses.  This can be especially concerning these days, with the costs of even the most basic medical care at astronomical levels. Fortunately, this is also false. Medical bills CAN be discharged through either a Chapter 7 or Chapter 13 bankruptcy and should definitely be included when an individual is weighing the benefits of deciding to file.  This, however, is only true for medical expenses incurred before the date of filing. Any debt incurred after the date of filing is not subject to discharge through the bankruptcy and therefore can be subject to debt collection.  

For more information on what debts can and cannot be discharged in bankruptcy, please contact your local bankruptcy attorney.

Stop Creditor Calls

When bills pile up and it seems impossible to get ahead, the situation is often made worse by the relentless phone calls of creditors.  Many people can feel trapped or harassed by bill collectors, who threaten legal action and more.  These calls and mailings can quickly become overwhelming and it can feel like there is no relief.  But there is.  By filing for Chapter 7 or Chapter 13 Bankruptcy, a person can find relief from these constant contacts from creditors.  If a bankruptcy is deemed appropriate, an individual should be able to expect creditors to stop contacting shortly after the court has sent out notifications.   Any further contact should be directed to the individual’s BankruptcyAttorney, who will then deal with the matter pursuant to Bankruptcy Law.

For more information on how to find financial relief through bankruptcy, please contact your local bankruptcy attorney.

Smart Money: Your Tax Return Could be a Ticket to Financial Freedom

This tax season, the average American taxpayer is receiving a $3,000 return. What

will you spend your tax return on this spring? Studies have shown that 43% of

Americans put their tax return into savings, 36% put the money towards paying off

their debt, 10% put money towards vacation, 6% purchase a luxury item, and 5%

make a necessary purchase, such as a house or car. While all are worthy ways to

spend money, paying off your debt could be the best investment you can make

with your tax return if you are in debt. Carrying around high-interest debt, with

interest compounding against you every month can be especially stressful. Surveys

tell us that debt is the most common cause of financial stress in the United States.

Your tax return could be a ticket to financial freedom.

If you have excessive amounts of debt that you are struggling to pay off, you could

spend your tax return most efficiently by putting the money towards filing for

bankruptcy. Bankruptcy offers the opportunity for you to get caught up on mortgages

or car loans without the threat of repossession or foreclosure and sometimes you can

be relieved from the legal obligation to pay some debts. To better understand if this

is something worthy of investing your tax return in, set up a consultation with your

local bankruptcy attorney to learn more.