What Is The Bankruptcy 180-Day Rule?
If you are planning to file for bankruptcy or have already filed, and you anticipate that you will be receiving a relatively large amount of money or a valuable asset, it is important to understand how the 180-day rule could apply to your bankruptcy case. The 180-day rule is relevant for consumer bankruptcy cases whether the individual is filing for Chapter 7 bankruptcy, Chapter 13 bankruptcy, or Chapter 11 bankruptcy. For most people, the 180-day rule is something to know about when you are receiving or have already received an inheritance. Our West Palm Beach bankruptcy lawyers can provide you with additional information.
Understanding the 180-Day Rule
Are you planning to file for bankruptcy or have you already filed? If so, are you anticipating that you will soon get an inheritance, or did you recently inherit property? Or, are you anticipating that you will receive a large gift from a family member or friend? It is essential to understand the 180-day rule and what it means for you.
Under the 180-day rule, any property inherited or received within 180 days from the day of filing for bankruptcy may be the property of the bankruptcy estate. In other words, an inheritance or a gift that you learn about within 180 days from the date you filed for bankruptcy may need to be liquidated if you are filing for Chapter 7 bankruptcy and the asset is not exempt, or you could be required to include it in your reorganization plan if you are filing for Chapter 13 bankruptcy and the asset is not exempt.
Is the Property Exempt?
If the inheritance or gift is exempt under one of the Florida bankruptcy exemptions, then you do not need to worry about the 180-day rule and how it could affect your case. If the property is exempt, it will not need to be liquidated in a Chapter 7 case or included in a reorganization plan for a Chapter 13 or Chapter 11 case.
If the property is not exempt, then you will need to work with an attorney to determine whether your property was received or inherited within 180 days from the date of your bankruptcy filing. It is critical for you to know that it does not matter if you physically receive an inheritance within 180 days from the date of your bankruptcy filing. If a person passes away and you are informed of your inheritance within that 180-day period, then the inheritance may be part of the bankruptcy estate.
Any property that you acquire, or that you learn you are set to inherit, more than 180 days following the date of your bankruptcy filing will be yours to keep without concerns about the property being subject to bankruptcy law requirements.
Contact a Bankruptcy Attorney in West Palm Beach Today
If you have any questions about inheriting property or receiving a major gift around the time of your bankruptcy case, it is extremely important to seek advice from a bankruptcy lawyer who can advise you. One of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan & Eller can provide you with more information about the 180-day rule and its potential application to your case.