Buying a house with inheritance $ before filing

[Christie]

Hi! Looking for some specific advice for our situation. We are in Pa and we had decided to file chapter 7. Just as we made our decision my mother-in-law became very sick and passed away. As we were handling all that we put filing on hold. It turns out that we are receiving an inheritance from her pension. Our lawyer told us to hold off on filing until we know exactly when and how much money is coming. (in hopes of just settling the debt instead of filing).

Here is the question. It looks as if we will be getting almost enough money that we would be able to buy the house we are renting. We would have to choose between settling debt or buying a home. There isn't enough to do both. Obviously buying our home outright with cash would benefit us more because we wouldn't have a mortgage or rent payment anymore.

Is it possible to buy this home outright and still file chapter 7 after the fact? Or, would the home then become something that creditors could come after?

[Pandora]

here are PA's exemption allowances http://www.legalconsumer.com/bankrup...T=PA#homestead

ETA: took other site out...

[newbie2]

I would talk to your attorney again about this. Seems to me you may be taking non-exempt money (the inheritance) and putting it in to an exempt area (depending upon PAs exemptions). This isn't something I would even consider without getting an attorneys advice.

One other question: If you buy the home outright, would you have enough money to pay your unsecured creditors? Also, if you own the home free and clear you may be in Chapter 13 territory and not Chapter 7 because of DMI.

[tod183]

If you have, say $10,000 on a card, you might offer them $2,500 to settle it. The money may go further than you think. If you do decide to go that route, make sure you get everything in writing.

[tcreegan]

Hi Christie,

Is it possible to buy this home outright and still file chapter 7 after the fact?

nice, easy question......No

The creditors are not the only problem, it is going to be the increased income forcing you out of Ch 7 range.
Your lawyer has it right, wait to see the amount and go from there.

Sorry for your loss and glad for your good fortune,

Tom in Colo

[scorpion35]

Hi! Looking for some specific advice for our situation. We are in Pa and we had decided to file chapter 7. Just as we made our decision my mother-in-law became very sick and passed away. As we were handling all that we put filing on hold. It turns out that we are receiving an inheritance from her pension. Our lawyer told us to hold off on filing until we know exactly when and how much money is coming. (in hopes of just settling the debt instead of filing).

Here is the question. It looks as if we will be getting almost enough money that we would be able to buy the house we are renting. We would have to choose between settling debt or buying a home. There isn't enough to do both. Obviously buying our home outright with cash would benefit us more because we wouldn't have a mortgage or rent payment anymore.

Is it possible to buy this home outright and still file chapter 7 after the fact? Or, would the home then become something that creditors could come after?

no u can't buy the house with cash and then file bk7.it would be considered fraud.if u had that much non exempt cash in the eyes of the trustee u should use it to pay your creditors


sorry for your loss

[backtoschool]

Your inheritance is income. An inheritance that is enough to buy a home will be enough income to keep you out of a chapter 7 in most cases. If you use your inheritance income to purchase a house, then the house is only exempt up to your state's limitations. The trustee can force you to sell the house to pay off creditors in a chapter 7. In a chapter 13, you can keep the house, but will be forced to repay a portion of your unsecured debt.

There is no way you can protect both the entire inheritance and the entire house. Your exemptions will not cover that.

[2manybills]

Even if you had filed, and received the inheritance within 180 days post-filing, you would have had to let the trustee know about it.

[Fallonedward]

I always wondered does that 180 day clock start the day you file or the day of discharge?

Even if you had filed, and received the inheritance within 180 days post-filing, you would have had to let the trustee know about it.

[2manybills]

I always wondered does that 180 day clock start the day you file or the day of discharge?

Day you file.

[wnguyen]

Even if you had filed, and received the inheritance within 180 days post-filing, you would have had to let the trustee know about it.

This is one of the questions the trustee asked me during the 341 meeting, so the answer would be yes.

[joh]

You could buy the house and wait to BK, just dont pay your crediter. I don't think they can garnish wages in PA. check on that I'm not sure.

[momofthree]

It appears to me (based on the link posted) that there is no homestead exemption in PA, but you could use the Federal exemptions which allow around $21k of equity to be exempted. If the property is worth more than that (most likely), then the trustee can sell it to pay your creditors. You'd be better off settling your debt and then using the rest of the money as a down payment. Nothing wrong with having a mortgage...