In bankruptcy, do inheritances go to the debts, or can the debtor keep them? Does timing matter? What about Chapter 7 vs 13? What happens when someone in a Chapter 13 bankruptcy receives an inheritance after confirmation?
It all depends on the chapter, and when the debtor got the interest. Not the money interest, but the property interest.
Let’s break it down.
It’s not uncommon for a debtor in Chapter 13 bankruptcy to need to convert to Chapter 7 if debtor has a job loss or health problems. In a rising real estate market, homes can appreciate between confirmation and conversion. To whom does the appreciation in equity belong? This is where debtors and Chapter 7 trustees fight fiercely over the home and its new equity.
Continue reading “9th Cir: Here’s who gets Asset Appreciation in Converted Bankruptcy”
Your chapter 13 case is confirmed, things are sailing along, and then it happens: there’s an inheritance or personal injury reward or life insurance payout or large asset of new property. Is this property of the estate, or is this the debtor’s and excluded from the bankruptcy case?
It all hinges on the tension between Sections 1306 versus 1327 of the Bankruptcy Code. Let’s see what all the fuss is about.
Continue reading “Post-confirmation Assets Part of a Chapter 13? It Depends”