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Tuesday, November 1, 2011

Exceptions to the general rule for what property comprises a bankruptcy estate

For the most part property that a debtor acquires (or becomes entitled to acquire) after filing for bankruptcy is not something that is considered part of the bankruptcy estate administered by the trustee.


There are some exceptions though. Here's the deal....if the debtor receives or even has a right to receive property of a certain type within 180 days after filing for bankruptcy you must let your attorney know to make the assessment to determine if it can be exempted (protected) for you. Failing to do so could result in a revocation of discharge based on bad faith and non-disclosure of the asset. Not a good result for anyone. In pretty much every creditor's meeting I've ever attended (many thousands) the trustee will make an inquiry as to the potential for the debtor to acquire certain types of property within 180 days of filing their case and will also inform them that if they do...they need to let them know (the trustee assigned to the case) and also their attorney.

  • an inheritance (applies if the person dies during the 180 days...as you have the right to inherit at that point...you don't actually have to have received the inheritance within the 180 days...could be years later.
  • Life insurance proceeds.
  • property received from a marital settlement agreement or divorce decree.

It's rare that these things crop up in an average case...but it does happen...it's happened in some of my cases over the years. It is more likely that the most or all of the types of assets listed above could be exempted in your bankruptcy depending on the value. Your attorney needs to make that analysis for you.


If you've got questions about chapter 7 or chapter 13 bankruptcy we'll be glad to help.


Attorney David D. Kingsbury


www.kingsburylawoffice.com

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