Q: Question about receiving an inheritance in the middle of chapter 7 bankrupty.

A: That's the basic result.

Prepare yourself for an increased fee for the bankruptcy Trustee as well, who is entitled to a percentage of amounts collected. The percentage is set by federal statute.

A: Before you file Bankruptcy under any chapter, consult competent counsel.

Property of the estate is defined by 11 USC § 541. It includes:

Any interest in property that would have been property of the estate if such interest

had been an interest of the debtor on the date of the filing of the petition, and that

the debtor acquires or becomes entitled to acquire within 180 days after such date

by bequest, devise, or inheritance.

11 U.S.C. § 541(a)(5)(A).

Subsections 541(a)(1) and (a)(5)(A) focus on mutually exclusive time periods. Thus, under the express language of subsection 541(a)(1), any legal or equitable interest of the chapter 7 debtor in a bequest as of the commencement of the chapter 7 case IS property of the chapter 7 estate. However, Bankruptcy Code § 541(a)(5)(A), is not implicated unless "the debtor acquires or becomes entitled to acquire" an "interest in property" by bequest "within 180 days after " the date of the commencement of the case (emphasis added). In re Lonstein, 950 F.2d 77 (1st Cir. 1991).

And the analysis is different under a Chapter 13 and 11.

A: I agree with the answers previously given. However, you may want to consider seeking dismissal of the Chapter with the assurance that you will pay the debts now that you have the money. It would save you the fees Attorney Winterstein mentions.