Can we File Chapter 13 if there is an Inheritance?
Question Detail: My husband and I filed a bankruptcy Nov. 2008 because of his job. We’re on a 3 year plan right now. I’ve turned over our tax refunds every year. I’ve done everything I’m supposed to do. My dad passed away a couple weeks ago and I found out I was in his will for an inheritance of an IRA for my retirement and a small monthly IRA check on another account. My dad was not in best of health at 80 when we had to file. Our lawyer told us before we filed if we do a chapter 7 bankruptcy we would lose my inheritance if he would die before our bankruptcy was over and we would lose our house in Nevada bought in 2006. If we chose a chapter 13 bankruptcy, we could keep our house and would not lose my inheritance if my father passed away before it was final. Is that true? My dad worked hard for his money. I don’t want it lost.Answer: Concerning home ownership, with a Chapter 13 bankruptcy the person can generally keep their primary residence, but he or she must continue to make the payments. (If there is equity in the house, larger payments may be required.) A second home or vacation home would most likely be liquidated as part of the Chapter 13 proceedings to help settle the debt. In a Chapter 7 bankruptcy, the primary residence would be sold as part of the proceedings. Concerning an inheritance, with Chapter 13 bankruptcy you do not automatically lose your inheritance. If you receive an inheritance, you usually must report it to the bankruptcy trustee. Depending on the value of the inheritance and the details of the Chapter13 bankruptcy plan, the person may or may not need to transfer the inheritance (or a portion of it) into the trust.