If you receive property or money after a bankruptcy filing, keeping the settlement depends on the nature of the award, when your cause of action originated, the bankruptcy chapter under which you filed, and your state’s exemption laws.
After Chapter 7
When filing for Chapter 7 bankruptcy protection, almost everything you own becomes the property of your bankruptcy estate. Unless an asset is exempt, the court-appointed trustee is allowed to sell it to pay creditors. The estate includes tangible property, and it also includes equitable and legal claims. Some settlements and interests are considered to be part of the bankruptcy estate, even if Bankruptcy Lawyers in Wichita, KS help you get them within six months of the date of filing.
Settlements
During a bankruptcy filing, you have to list all actionable causes and legal claims as assets. If you get a settlement after filing its proceeds may be included in the estate, even if your case is closed. Whether a particular settlement is part of the estate depends on your injury date. If your claim existed before the bankruptcy, your settlement is usually included in the estate. Attorney Philip L. Weiser Wichita, KS can advise you as to whether you can keep your settlement out of the bankruptcy estate.
Death Benefits, Inheritances, Divorce Assets and Property Settlements
Some settlements are part of the bankruptcy estate even if you can claim them within the six months after your case is filed. Property types include inheritances, life insurance proceeds and assets obtained in a divorce settlement. In these cases, keeping your assets depends on the date of entitlement, not the date of reception.
After Chapter 13
In addition to the factors listed above, estate property in a Chapter 13 filing includes property and settlements acquired during your case’s pendency (which can last up to five years). However, unlike in Chapter 7, your court-appointed trustee does not sell your assets to pay creditors.
In return for keeping your assets, you are obligated to pay unsecured creditors an amount that’s equal to your nonexempt assets’ value. If you get a settlement that’s not exempt during a Chapter 13 case, you have to increase your debt payments by the same amount, including the increase in your payment plan. For help with your Chapter 7 or Chapter 13 case, consult Bankruptcy Lawyers in Wichita, KS today.
