Filing for bankruptcy is often a major step toward financial stability, but unexpected events can still arise after your case is underway. One common concern is what happens if you inherit money after filing for bankruptcy. For individuals in Raleigh and throughout North Carolina, the answer depends on several factors, including the timing of the inheritance and the type of bankruptcy filed. At Law Office Of Calvin Craig, we can provide legal assistance to the Raleigh public and help you understand how an inheritance may affect your case.

Why Timing Matters in Bankruptcy Inheritances

The timing of an inheritance is one of the most important factors in determining how it is treated in bankruptcy. Under federal bankruptcy law, if you become entitled to an inheritance within 180 days after filing your bankruptcy petition, that inheritance may be considered part of the bankruptcy estate.

This means the trustee could potentially use those funds to pay creditors.

If the inheritance occurs more than 180 days after you file, it is generally not included in the bankruptcy estate. However, it is still important to review

your specific situation carefully, as different circumstances can affect how the law applies.

Inheriting Money During a Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, the goal is usually to eliminate unsecured debts by liquidating non-exempt assets. If you inherit money within 180 days of filing, the trustee may be able to claim some or all of those funds, depending on available exemptions under North Carolina law. Certain assets may be protected, but cash inheritances are often limited in how much can be shielded.

If the inheritance occurs after the 180-day window, it typically does not impact your Chapter 7 case. Even so, proper disclosure and legal guidance are essential to avoid complications.

How a Chapter 13 Bankruptcy Handles Inheritances

Chapter 13 bankruptcy works differently because it involves a repayment plan lasting three to five years. If you inherit money while your Chapter 13 case is ongoing, even after 180 days, the inheritance may still affect your repayment plan. The trustee or court may require a modification of the plan to increase payments to creditors based on your improved financial position.

Because Chapter 13 cases remain open for several years, inheritances are more likely to come into play and should always be addressed with care.

The Importance of Disclosure

Regardless of the type of bankruptcy, honesty and transparency are critical. Failing to disclose an inheritance can lead to serious consequences, including dismissal of your case or allegations of bankruptcy fraud. If you learn that you may be receiving an inheritance, it is important to notify your attorney as soon as possible so the proper steps can be taken.

Getting Guidance After an Unexpected Inheritance

An inheritance can be a financial blessing, but during bankruptcy it can also create uncertainty and stress. Understanding your obligations and rights under bankruptcy law is key to protecting your interests. At Law Office Of Calvin Craig, we can provide legal assistance to the Raleigh public and help you navigate how an inheritance may impact your bankruptcy case while working toward the best possible outcome.