Question about receiving money after filing BK (time frame?)

[JJCA]

Can someone clarify what the time frame is for this:

If you file BK, and then get money from somewhere, for example a personal injury settlement, divorce settlement, inheritance etc. how long after filing would that money still go to pay creditors? (Or how long until you could keep the money)

Does the time frame vary depending on where the money is coming from?

I thought I read that ANY money you received within 6 months of FILING BK would then become part of the "BK estate" unless it was exempt.

But then I read that it was any money received within 6 months after DISCHARGE of BK.

So, after discharge are you 'free and clear' and anything you get after is yours? Or does the clock keep going another 6 months?

JJ

[keepmine]

The code provides for 3 instances where a trustee may have a claim and those are within 180 days of FILING.
Once discharged, your financial affairs are your own business {assuming of course none of the 3 things occur within 180 days of filing.

(5) Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date--

(A) by bequest, devise, or inheritance;

(B) as a result of a property settlement agreement with the debtor’s spouse, or of an interlocutory or final divorce decree; or

(C) as a beneficiary of a life insurance policy or of a death benefit plan.

[justbroke]

Please remember that it is based on your entitlement to receive the money, not actual date of receipt! Some people gt that confused! So, if someone passes away or you enter into a divorce proceeding within the 180 days after filing, then you have become "entitled" within the required 180 days. That property becomes property of the bankruptcy estate, if not otherwise exempted.

Please also realize, that this DOES NOT INCLUDE... lottery winnings, capital gains, or any other real or personal property that you obtain after filing. It is ONLY those 3 items listed in the code that matter.

(Winning the lottery before your case discharges, might get the United States Trustee (UST) interested in your case. However, the money is not part of the bankruptcy estate and neither subject to distribution nor subject to seizure by the Trustee! The UST may seek a dismissal under the Totality of Circumstances, though. It is very unlikely that this would happen anyhow, since the odds of winning the lottery are already astronomically impossible.)

[JJCA]

I think I need this is 'layman's' terms :-)

Is it (5) AND (A), (B) & (C)

I think (5) means any money from any source that you receive or become entitled to receive during the 180 days after filing. Or does (5) have to do only with (A), (B) & (C)?

Since (A), (B) & (C) seems to mean money received from inheritance or divorce only.

Is it any money from any source within 180 days of filing? Or only money from inheritance or divorce? Or am I way off...AGAIN!?!

These 'legal sentences' are tough for me to understand!!
Thanks for replying!!

JJ

[JJCA]

I think justbroke's post clarified this a bit more (he replied as I was writing the post asking for clarification!) I think now it is actually just inheritance or divorce money that counts. So hypothetically, you could have money handed to you (lets say someone gives you $10,000 to live on or do whatever) while you are within your 180 days and it would not be part of your estate(?) Of course you would have to have NOT known about this money when you filed. This does not really apply to me as I am not expecting this, just trying to understand the risks & benefits of filing BK!

Thanks
JJ

[justbroke]

It's (5) and (A), or, (B), or C.

The summary I provided earlier is the way it works.

justbroke's study guide: when the bankruptcy code in Title 11 of the United States Codes (11 USC) ends a paragraph with "---", it just means keep reading the sub-parts. So, 11 USC 541 (which is referenced above), You can just take what's in (5) and combine it with EACH OF (A), (B) and (C). Paragraph (5) doesn't stand alone by itself.

As a matter of fact, paragraph (5) is a sub-paragraph and needs (a) to go with it!

11 USC 541(a)

(a) The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held:
.
.
(5) Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date—
.
.
.

So, to read it, it actually looks like this...

justbroke's breakdown of 11 USC 541(a)(5)...

(a) The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held:

(5)(A) Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date by bequest, devise, or inheritance;

(5)(B) Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date as a result of a property settlement agreement with the debtor’s spouse, or of an interlocutory or final divorce decree; or

(5)(C) Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date as a beneficiary of a life insurance policy or of a death benefit plan.

Since the "second to last" sub-paragraph (5)(B) has an "or", that means each part (A, B and C) is connected by "or". SO it's (5)(A) or (5)(B) or (5)(C).

[helpme2010]

It's (5) and (A), or, (B), or C.

The summary I provided earlier is the way it works.

justbroke's study guide: when the bankruptcy code in Title 11 of the United States Codes (11 USC) ends a paragraph with "---", it just means keep reading the sub-parts. So, 11 USC 541 (which is referenced above), You can just take what's in (5) and combine it with EACH OF (A), (B) and (C). Paragraph (5) doesn't stand alone by itself.

As a matter of fact, paragraph (5) is a sub-paragraph and needs (a) to go with it!



So, to read it, it actually looks like this...



Since the "second to last" sub-paragraph (5)(B) has an "or", that means each part (A, B and C) is connected by "or". SO it's (5)(A) or (5)(B) or (5)(C).

Depending on your state, their are exclusions whereby you can keep a certain amount of money. For example, in California, lets say you inherited a trust of $10,000 or $20,000, you will likely be able to include up to that amount in your bk filing to keep. The creditors won't be able to come after you for that inheritance. But there are limits.

This is a great reason why you should hire an attorney. You never know situations like this that may arise and you don't want to make a mistake and lose money over something like this that may come up.

[JJCA]

Thanks for the replies. They have helped. I was thinking more along the line of: If I filed BK, and had no way to live, and then some kind soul gave me money to survive on temporarily (perhaps a little here & there or maybe even a lump sum)..would that money have to be declared and given to the trustee. Just wondering how I would survive after BK :-) And if & for how long money goes to the "BK estate."

I think it has been explained as clearly as possible. It seems best to assume anything during the 6 months after filing goes into the estate. Right? And if I want to get a divorce, I should do so after the BK and the 6 months have past :-) And...hope no one I know passes away & leaves me money until the 6 months have past also!! LOL

JJ

[justbroke]

Absolutely not safe to assume! Only those 3 things listed are part of the Estate. The second portion is that they are part of the estate, and then are subject to exemption based on Federal and State bankruptcy exemptions.

The only things that count after you file are inheritances, death benefits, and property obtained through divorce (period). I could give you $10,000 one day after filing, and that would absolutely not be part of the bankruptcy estate.

[tcreegan]

Hi all,

JJCA, if some kind soul offers help, take it and pay it forward later. Just don't divorce anyone or let anyone die....

helpme, these would be the BK exemptions, if it would have been exempt in the BK, you keep it.

Enjoy every sandwhich....

Tom in Colo