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What you must know about inheritances and bankruptcy

On Behalf of | Jan 13, 2020 | Bankruptcy

When you file bankruptcy in Texas, there are many requirements you must meet and rules you must follow. It is essential that you are completely honest with the court about your finances and assets. If you falsify information or omit information, it can lead to severe consequences for you. This is why you will receive information informing you about certain aspects of the process and your duties. 

When you meet with the trustee at the 341 meeting, which occurs about a month and a half after you file your initial paperwork, the trustee will ask you some questions about the information you provided in your petition. He or she will also advise you of certain responsibilities you have. One of these, according to the U.S. Department of Justice, is reporting to the court if you receive an inheritance within six months after your file date. 

Bankruptcy estate property 

The reason why you must report an inheritance is that any property you obtain within six months of filing your bankruptcy petition becomes property of the bankruptcy estate. This means the trustee gains control over the property and may use it or sell it to get money to repay your creditors. So, if you receive an inheritance two months after you file, for example, you must turn over that inheritance to the trustee. You cannot keep it. If the court discovers you hide an inheritance, then you could face penalties. 

The job of the trustee is to manage your assets and ensure your exemptions are accurate. If you have non-exempt assets or receive money or something of value during the bankruptcy process, then the law requires you to use them to pay back your outstanding debts. After all, you did make a commitment to your creditors, so if you are able to pay them, then the law says you must do so.