If you are considering filing for Chapter 7 bankruptcy, you may be wondering about an inheritance you will soon receive and whether you will be able to protect it. Here is some helpful information about inheritances and Chapter 7, and remember as always that it’s important to work with an experienced bankruptcy attorney to ensure that you can protect valuable property and successfully eliminate certain debts.In Illinois, if you receive an inheritance within 180 days (about six months) after filing for Chapter 7, you will need to report it to your bankruptcy trustee because it is legally considered property of the bankruptcy estate in order to pay off your debts. This also applies if you have not yet received the inheritance, but your right to do so arose during this 180-day period.In Chapter 7, non-exempt assets are collected and liquidated in order to pay your creditors, so an inheritance received within 180 days of filing may also be liquidated if it is not exempted under state law. However, Illinois does offer a “wildcard exemption” which allows you to protect up to $4,000 in assets and can be applied to an inheritance. If you receive an inheritance after this 180-day period has expired, it belongs to you and does not need to be disclosed to the bankruptcy court.If you are struggling financially and considering filing for Chapter 7 bankruptcy, you’re not alone. Contact an experienced bankruptcy attorney today for a free consultation.
Inheritances and Chapter 7
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