Month: June 2020

Chapter 7 Bankruptcy and Inheritance

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Chapter 7 Bankruptcy and Inheritance

Chapter 7 Bankruptcy involves the trustee taking charge of all of your non-exempt assets in order to repay your creditors. A question may, therefore, arise regarding the status of any inheritance you receive before or after you have filed for bankruptcy. This article will educate on all the essentials concerning Chapter 7 Bankruptcy and Inheritance.

Inheritance Before Bankruptcy Filling

Any inheritance you receive before filing for bankruptcy will be counted towards the bankruptcy estate if you are unable to receive an exemption on it. You should be aware that the entitlement date is often considered as the date the benefactor passed away and not the date you actually receive the transfer of the assets. Hence, if you had filed for bankruptcy after a person passed away but you haven’t yet collected on your inheritance, it will be still be counted in the bankruptcy estate.

Inheritance After Bankruptcy Filling

If you inherited any form of assets after you filed for bankruptcy, it is yours to keep and will not be handed over to the bankruptcy trustee. An exception to this is the situation in which you are entitled to it within 180 days of your filing.

In this case, it would become part of the bankruptcy estate if you are unable to exempt it. The 180-days rule was enacted by Congress to prevent the abuse of Chapter 7 bankruptcy by people looking to file in anticipation of receiving a significant inheritance.

In addition to the trustee laying claim to your inheritance, you will also be required by the court to amend your paperwork to account for the transferred assets. This holds even if the court has closed your case. The type of form you will need to fill out will depend on what form of assets you inherit.

  • If the inherited asset is real estate property, you will need to amend Schedule A.
  • If the inherited asset is money or personal property, you will need to amend Schedule B.
  • In either case, if you want the asset(s) to be exempt, you will also need to amend Schedule C.

Non-Filing Spouse and Inheritance

If your non-filing spouse inherited any assets during or before your bankruptcy, it would be considered separate property and not counted towards your bankruptcy estate. However, should they decide to transfer ownership of the inheritance, it will then could count towards your estate and thus, could be claimed by the trustee.

Hire a Professional Attorney

If you have received an inheritance and want to keep it safeguarded from your bankruptcy case, it can be worthwhile to take the advice of a professional bankruptcy lawyer to better understand your options. For a free consultation with a seasoned attorney, book an appointment online or call at 512-640-3340.

Bankruptcy for Military Personnel – Things You Need to Know

As part of the US armed forces, you enjoy certain benefits while filing for bankruptcy that is not available to civilians. However, there also includes a certain drawback. Here is all the essential information you need to be aware of regarding bankruptcy for military personnel.

Servicemembers’ Civil Relief Act

Actively duty service members are provided many legal protections against civil action through the Servicemembers’ Civil Relief Act (SCRA). As long as you are on active duty, any legal action relating to bankruptcy proceedings will be postponed by the court. In should be noted that this protection is separate from a bankruptcy automatic stay period and doesn’t impact its duration.

Mean Test Exclusion

To qualify for a Chapter 7 bankruptcy, a debtor has to pass a mean test. In some cases, disabled veterans, reservists, and national guard members may be exempted from the test whiling filing.

Disabled Veteran

Meeting certain conditions, disabled veterans can qualify for Chapter 7 Bankruptcy without having to pass a mean test. The requirements for the exemption are as followed:

  1. The debt must have been primarily incurred while the debtor was on active duty or engaged in a homeland defense activity.
  2. Have a disability rating of at least 30% or had been discharged from active duty as a result of the disability.

Reservists and Members of the National Guards

Reservists in the Armed Forces or members of the national guards who have been on active duty or engaged in a homeland defense activity for 90 or more days may qualify for an exemption from the mean test.

This remains true for the duration of the active duty and 540 days afterward. However, once the period ends, you will be required to take the mean test no later than 14 days after if the time had already not expired in this regard.

Filing for Bankruptcy may Affect Your Security Clearance

A downside for military personal filing for bankruptcy is that it may affect their security clearance. However, this is not automatic and differs on a case-by-case basis. There are a lot of factors involved that influence whether filing for bankruptcy will affect your security clearance. Such can include your performance report, your relationship with your superiors and the total amount of debt that you have.

Sometimes, filing for bankruptcy may actually be beneficial as it will be viewed by your superiors as a positive step towards financial responsivity. Before filing for bankruptcy, it is always recommended that you ensure that it is not going to have an adverse effect on your security clearance. A bankruptcy lawyer can be an aid in this regard as well as help you arrive at a more favorable outcome at the end of the process. For a free consultation with an experienced lawyer, book an appointment with us online or call 512-640-3340.

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