What is the 180-Day Rule in Bankruptcy?
Whether you are considering Chapter 7 bankruptcy or Chapter 13 bankruptcy, it is extremely important to work with an experienced Orlando bankruptcy lawyer given the complexity of bankruptcy law. To be sure, there are so many intricacies of bankruptcy law under the U.S. Bankruptcy Code, and it can be very difficult for consumers to understand all of their obligations and rights when it comes to filing for consumer bankruptcy. One of these complicated parts of bankruptcy law is the “180-Day Rule.” What is the 180-Day Rule, and how could it impact your personal bankruptcy case?
When You Are Filing for Bankruptcy and Also Expecting to Receive an Inheritance
For most debtors in Orlando, the 180-Day Rule will come into play if the debtor is expecting to receive an inheritance (or has already received an inheritance). The basic information about the rule is this: if you inherit property within 180 days from the date that you file for bankruptcy, you may not be able to keep that property. In addition, depending upon the specific facts of your case, an inheritance could affect the amount of your repayment plan in a Chapter 13 bankruptcy case.
One of the primary functions of the 180-Day Rule is to prevent a debtor from filing for bankruptcy in order to get rid of existing debts while also protecting an inheritance. If you are thinking about bankruptcy and also may be inheriting property soon, it is important to learn more about how the 180-Day Rule could impact your case.
If You Are Inheriting Property and Plan to File for Bankruptcy
In the event that you are inheriting (or already inherited) property and plan to file for bankruptcy, here are some basic points to keep in mind:
- If you inherit property prior to filing for bankruptcy: Unless the property is exempt (which we will discuss below), any inherited property will be part of the bankruptcy estate. Accordingly, if you file for Chapter 7 bankruptcy, the inheritance may be liquidated along with other non-exempt property.
- If you inherit property within 180 days of your bankruptcy filing date: Again, unless the property is exempt, the inheritance will become part of the bankruptcy estate. In addition, U.S. bankruptcy law will require you to amend your bankruptcy schedules depending upon the type of property you inherit.
- If you inherit your property more than 180 days after you file for bankruptcy: In this time frame, the inheritance will not become part of the bankruptcy estate and you will be able to keep it. You will not even need to consider whether it is exempt.
Now, important, when is the date of the inheritance for purposes of the 180-Day Rule? The date of the inheritance is the date that you become entitled to that property and not the date that you actually obtain the property.
Determine Whether Your Inheritance May Be Classified As Exempt Property
The amount of your inheritance, as well as the type of property, will be important factors in determining whether the property is exempt. If the inheritance is exempt, you will be able to keep it regardless of whether 180 days gave passed since you filed for bankruptcy. However, if you do inherit exempt property within 180 days of filing, you will still need to amend your schedule of exempt assets.
Contact an Orlando Bankruptcy Lawyer
If you have questions about managing an inheritance in a bankruptcy case, an Orlando Chapter 7 bankruptcy lawyer can assist you. Contact Anderson & Ferrin for more information.