In an economy slow to gain steam, many Alabamans find themselves facing financial challenges. When a low income, unemployment, or health issue prevents them from making payments on their debt, they may become depressed, stressed, and face creditor harassment. It can make everyday life hard and feeling as if no one is on his or her side. Fortunately, help may be available, but those facing these hardships should not wait too long to act on their options, or else they may lose protection for some of their expected assets.
For example, a Chapter 13 bankruptcy seeks to provide debt relief by attempting to reduce interest payments and achieve more manageable payments. To reduce debt under Chapter 13, individuals must file for bankruptcy and an assessment of their assets must be made. Yet, according to a recent court ruling, a Chapter 13 debtor's inheritance is property of the bankruptcy estate if it is acquired before the case is closed, dismissed, or converted to a Chapter 7, Chapter 11, or Chapter 12 bankruptcy.
This means if one hesitates to file Chapter 13 bankruptcy then receives an inheritance before their case is closed, the inheritance will likely be used to pay off creditors. Such a ruling can have a drastic impact on an individual's financial planning and may deny them the leg up they were looking for in an inheritance. This is just one of the many aspects one must consider when choosing whether to file for bankruptcy.
Luckily, these individuals can consult with an experienced Alabama bankruptcy attorney. The attorney can describe the process in understandable terms and he can advise as to what action the client should consider taking. With this help, the individual may be able to stop creditor harassment, reduce debt, and reach the fresh financial stop he or she deserves.
Source: Bloomberg Law, "Debtors' Inheritance Received Before Ch. 13 Case Closed Is Property Of Bankruptcy Estate," Diane Davis, Nov. 5, 2013