Large windfall possible

[Amadan]

Just found out that my in-laws plan on handing out some money to their kids. So my wife is going to get about $15k. We are just over a year into our 13. I've put in several calls to the lawyer and haven't been able to get ahold of him, so now I am getting worried. The gift has some strings attached, mainly that at least half we are expected to put in an education trust for our kids. The problem is that neither of our families knows about our chapter 13. If they give us this money, we have to turn it over to the trustee, right? What if we come clean and tell them to place it all in our kids college trust?

[debee]

I would tell them you're in a bk-repayment scenario and ask them to refrain from gifting you anything for 4 more years. Or have them open 529 education accounts in their names with your kids listed as the beneficiaries and the 15K split between them. Nothing wrong with declining to receive a gift at this time.

[justbroke]

I'm with debee on this. Don't let that money ever reach your hands. Make sure that a 529 educational account is protected, and have them place it into that account for the children.

[catleg]

I don't understand, it's not income, it's a bona fide gift. From family, not a stranger masking income as gifts like Las Vegas dealers used to do in the old days. The code says nothing about gifts being part of the estate. I'd appreciate hearing from one of the legal eagles what they think.

[justbroke]

I don't understand, it's not income, it's a bona fide gift. From family, not a stranger masking income as gifts like Las Vegas dealers used to do in the old days. The code says nothing about gifts being part of the estate. I'd appreciate hearing from one of the legal eagles what they think.

It is definitely income under the code.

Where you find what must be committed in a Chapter 13, is in 11 USC 1322. While "income" is not defined anywhere in the bankruptcy code, it is all income from all sources regardless of tax status. If you are not paying back your allowed unsecured claims (creditors) 100% over the life of the plan, then you must pledge your disposable monthly income.

11 USC 1322(a) notwithstanding any other provision of this section, a plan may provide for less than full payment of a amounts owed for a claim entitled to priority under section 507(a)(1)(B) only if the plan provides that all of the debtor's projected disposable income for a 5-year period beginning on the date that the first payment is due under the plan will be applied to make payments under the plan.

So, if you're not paying 100%, then you must submit, to the custody and control of the Trustee, your disposable monthly income.

Remember, that the laws build upon one another and many don't stand alone... such as using the definition of CMI to define "income" for the other chapters in the bankruptcy code. I think sometimes that we try to use the definition of CMI to define "income", when we shouldn't. CMI is used solely for the means test. CMI is not used to define "income" anywhere else in the code.

There is plenty of caselaw where debtors in a Chapter 13 tried to claim that even inheritances, after the 180 day mark, were not property of the Estate. Some think that the 180 day limit for inheritances and such in 11 USC 541, applies in Chapter 13, but it doesn't. 11 USC 1306 supersedes it and specifically and purposefully "includes" what otherwise may be excluded in 11 USC 541.


I hope that helps.

[bling32]

Sounds like half is a gift to kids not you. So, half should not be counted as income. Just my two cents.

[debee]

529 college savings accounts are assets of the account owner. So, if Grandparents open one it belongs to them. No impact on OP's financial picture.

[catleg]

Wow that really sucks. Good thing it was discussed upfront. Grandparents can do a UGMA account for grandkids.