If I have a friend who has filed bankruptcy but since this happened his father passed away and left him a third of his house which is $100,000?

UPDATED: Mar 8, 2013

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If I have a friend who has filed bankruptcy but since this happened his father passed away and left him a third of his house which is $100,000?

How can he keep the money?

Asked on March 8, 2013 under Bankruptcy Law, New Jersey


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You didn't indicate just what type of bankruptcy was filed. if it was a Chapter 7, generally speaking, when money is inherited from someone who dies within 180 days of the filing date, that money becomes part of the bankruptcy estate. The money is used to pay creditors.

In a Chapter 3 case, the 180 day rule doesn't apply. If a debtor become entitled to an inheritance after their Chapter 13 case is closed, the money is theirs to keep. However, any inheritance to which they become entitled to during their case will increase the amount unsecured creditors are entitled to receive. This is because an inheritance is considered additional disposable income which must go to pay creditors.

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