Oak Park Real Estate & Estate Planning Blog

In many different areas of the law, there is a rule known as the “180-day rule.” There is a 180-day rule in immigration law, as well as in criminal law in a number of jurisdictions. There is also a 180-day rule when it comes to U.S. bankruptcy law , and that is the rule we want to discuss with you today. In bankruptcy law, the 180-day rule applies to consumer bankruptcy cases when a debtor is expecting to receive an inheritance, a cash gift, or another payout during the bankruptcy process. The 180-day rule clarifies when that money will need to go into the bankruptcy estate and when the debtor will be able to keep the money. If you have questions about the 180-day rule, or if you are planning to file for bankruptcy but also know you will soon be receiving an inheritance or another type of cash gift, you should seek advice from an Oak Park bankruptcy attorney about how that money will affect your case. Understanding the 180-Day Rule In U.S. bankruptcy law, the 180-day rule says tha...

If you recently received an inheritance, or if you know you may be receiving an inheritance soon, you should know that it may impact your Chapter 13 bankruptcy case . Yet the way an inheritance will affect a Chapter 13 bankruptcy case is much different than how it will affect a Chapter 7 bankruptcy case. In Chapter 7 cases, courts need to know about all assets to properly classify them as exempt or non-exempt, and non-exempt assets will be liquidated in order to repay creditors and to discharge debts. In Chapter 13 cases, assets also must be properly classified as exempt or non-exempt, but assets are not liquidated. Instead, whether or not assets are exempt will affect the debtor’s Chapter 13 debt reorganization and the repayment plan. Given the ways in which exempt and non-exempt assets are relevant to a Chapter 13 bankruptcy case, you may not be surprised to learn that an inheritance will not be distributed immediately to creditors the way it would in a Chapter 7 case. Instead, an i...

In both Chapter 7 bankruptcy and Chapter 13 bankruptcy cases, the debtor will be required to disclose information about all assets and income to determine eligibility for bankruptcy as well as to determine the course of the bankruptcy case. While assets are treated differently in Chapter 7 and Chapter 13 bankruptcy cases, receiving an inheritance can significantly affect both types of bankruptcy cases. Today, our Oak Park bankruptcy attorneys can explain in more detail how inheritances are handled in Chapter 7 bankruptcy cases. Chapter 7 Bankruptcy and Inheritances First, we want to discuss how inheritances will be treated in Chapter 7 bankruptcy cases. It will be extremely important to know when you become entitled to the inheritance, and whether that occurs before, during, or after your bankruptcy filing. If you find out that you will be entitled to receive the inheritance before you actually file for Chapter 7 bankruptcy, you will need to determine whether the inheritance can be...

When you make the decision to file for consumer bankruptcy , it can be confusing to understand what property is exempt and how your current assets will be handled in your bankruptcy case. There are also important distinctions between Chapter 7 bankruptcy and Chapter 13 bankruptcy , since the former is a “liquidation” bankruptcy in which all non-exempt assets are liquidated in order to repay creditors. One issue that can be especially unclear is how inheritances are handled in a bankruptcy case. For example, if you inherit property either before you file for bankruptcy or after you file your bankruptcy petition, will you be able to keep that property? The answer to this question can vary depending upon a number of different factors. We want to address some of those key factors for you below. Is the Inheritance Exempt? One of the first considerations is whether an inheritance would be exempt property under Illinois law . In Oak Park, debtors who are filing for bankruptcy are required...

Should you be thinking differently about filing for Chapter 7 bankruptcy if you recently inherited an individual retirement account (IRA)? According to a recent article in The Detroit News , inheriting an IRA can actually make a big difference in terms of your personal finances and what you can gain by filing for consumer bankruptcy . Based on the U.S. Supreme Court’s ruling in Clark v. Rameker , inherited IRAs are not associated with the same protections as IRAs that were not inherited. Although the case was decided in 2014, the article emphasizes the need for debtors to revisit the decision and its remaining implications for personal bankruptcy cases. How Inherited IRAs Can Affect Your Bankruptcy Filing Why should an IRA impact your personal bankruptcy filing? After all, debtors are entitled to a number of exemptions that allow them to keep certain property even after filing for liquidation bankruptcy. IRAs and 401(k) accounts are exempt up to a certain cap. The fe...