Can a trustee take an entire inheritance of $400,000 if the chapter 7 bankruptcy was for 41,000? 29 Answers as of June 24, 2014

Chapter 7 bankruptcy was filed Sept. 17th 2013 and resolved Oct 19th 2013 for $41,000 but an aunt passed in December 2013 in which the inheritance may be approximately $400,000. So I need to know if the bankruptcy is opened again, can the trustee take the entire amount of the inheritance for the creditors?

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Eranthe Law Firm
Eranthe Law Firm | Cate Eranthe
Yes according to the code it is part of the estate. It is to be taken by the Trustee and then paid to creditors who file a claim. After expenses the balance is returned to you. You must disclose it in a timely fashion. Please go see a knowledgeable local bankruptcy attorney. There may be ways to prevent this from happening. My opinion is that only enough to pay the potential claims should go to the Trustee. See if you are a candidate for a conversion to a Chapter 13 with a 100% payment plan. What form is the inheritance? Would it cost more to liquidate and return than is fair? It is possible to bring a motion to limit the turn over of the funds.
Answer Applies to: California
Replied: 6/24/2014
EDWARD P RUSSELL | EDWARD P RUSSELL
In general an inheritance received within 6 months subsequent to the filing of the bankruptcy is part of the bankruptcy estate. After exempting what you can the remainder would go the trustee for purposes of paying creditors of the estate. If any creditors are owed money after the $41,000 payment to creditors then the trustee must pay them from the inheritance monies. You should notify your attorney and the trustee of the inheritance.
Answer Applies to: Minnesota
Replied: 6/24/2014
Stephens Gourley & Bywater | David A. Stephens
No the trustee is limited to the amount of the claims and his fees and costs.
Answer Applies to: Nevada
Replied: 6/23/2014
Baner & Associates | Sandra M Baner
You may be entitled to exempt a portion of the inheritance and the trustee may use any nonexempt amount t pay creditors. The trustee does not get to take more than is necessary to pay creditors (and he is allowed to be paid his/her expenses and commission).
Answer Applies to: Wisconsin
Replied: 6/23/2014
Law Office of Marlin Branstetter
Law Office of Marlin Branstetter | Marlin Branstetter
A trustee can only take what money is needed to satisfy valid creditor claims and administration fees.
Answer Applies to: California
Replied: 6/23/2014
    Joseph Lehn, Esq
    Joseph Lehn, Esq | Lehn Law, PA
    Much will depend on the total amount of claims filed by the creditors. You will be required to pay the claims in full, but not any more than that.
    Answer Applies to: Florida
    Replied: 6/23/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    No, they can take the amount that the creditors will file proof of claims for and for the trustee legal fees.
    Answer Applies to: New York
    Replied: 6/23/2014
    Ronald K. Nims LLC | Ronald K. Nims
    Theoretically,the trustee can take the entire inheritance because inheritances the debtor becomes entitled to receive within 180 days are the property of the estate. However, the trustee can only keep enough to pay the creditors and the expenses of administering the Chapter 7. So, it would make sense for the trustee to accept much smaller amount that is calculated to just pay those items. But when there is money in a Chapter 7, trustees get greedy, very greedy, often they take 100% of the money and the creditors don't get a dime, even if the Chapter 7 has thousands of dollars. Hire a bankruptcy lawyer to negotiate with the trustee.
    Answer Applies to: Ohio
    Replied: 6/23/2014
    Tidewater Law Group PLLC | Seth Schoenfeld
    The bankruptcy trustee can take up to the amount of the allowed claims. So if you only owe $41,000 the trustee will take 41k of the 400k to pay all the creditors. The Trustee may request that you turn over all or part of the money until the creditors have a chance to file claims. Once all the creditors are paid then the trustee will return any extra funds.
    Answer Applies to: Virginia
    Replied: 6/23/2014
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    The only amount that can be taken is the amount of debt owed, the Trustee's commission and the Trustee's attorney fees.
    Answer Applies to: Michigan
    Replied: 6/23/2014
    GARCIA & GONZALES, P.C.
    GARCIA & GONZALES, P.C. | Richard N. Gonzales
    No, only what is owed to the creditors. The Trustee will also be paid a fee for administering the estate.
    Answer Applies to: Colorado
    Replied: 6/23/2014
    Benson Law Firm
    Benson Law Firm | David Benson
    The Trustee should take only so much as is required to pay the unsecured creditors in full.
    Answer Applies to: Ohio
    Replied: 6/23/2014
    Law Office of Peter M. Lively
    Law Office of Peter M. Lively | Peter M. Lively
    Chapter 7 trustees can't be 100% sure what the total claims against your bankruptcy estate will be until after a notice of claims bar date is served and the deadline for claims has passed. Therefore, they will typically hold the entire amount of liquid assets pending completion of their work and refund the unapplied amount to the debtor afterward. Trustee compensation is capped under 11 USC Section 326.
    Answer Applies to: California
    Replied: 6/23/2014
    Michael B. McFarland, P.A. | Michael B. McFarland
    No. The trustee can only take enough to pay the bills and cover administrative expenses and fees. You should probably consult with an experienced bankruptcy attorney, however, to make sure things are handled correctly.
    Answer Applies to: Idaho
    Replied: 6/23/2014
    Marc S. Stern
    Marc S. Stern | Marc S. Stern
    Anything inherited within 180 days of the filing is property of the estate. It must be reported and the failure to report can result in revocation of the discharge. It may also be a bankruptcy crime that is a felony under federal law. The trustee can only use money to pay creditors and reasonable administrative costs. (S)He does not get to keep the entire amount.
    Answer Applies to: Washington
    Replied: 6/23/2014
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    Yes, but the trustee would need to return any surplus beyond what is needed to pay everyone 100% (including the trustee's fees). The debtor can also disclaim a portion of the inheritance as long as the required provisions of the probate code are met.
    Answer Applies to: California
    Replied: 6/23/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    They can only take enough to pay creditors and his/or her fees. You should get a lawyer for the sole purpose of making sure you are not overcharged..
    Answer Applies to: California
    Replied: 6/23/2014
    Mauritz Van Niekerk, Attorneys at Law
    Mauritz Van Niekerk, Attorneys at Law | Christiaan van Niekerk
    No, he will hand you the remainder back.
    Answer Applies to: New York
    Replied: 6/23/2014
    Danville Law Group | Scott Jordan
    What do you meant the Chapter 7 bankruptcy was for $41,000? Do you mean that you owed $41,000 to unsecured creditors? To answer your question specifically, yes, the trustee can take the entire inheritance. However, the trustee will only use $41,000 plus their fee and return the rest. It may be better to simply negotiate with the trustee.
    Answer Applies to: California
    Replied: 6/23/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    A bankruptcy trustee is not a thief and cannot take more than the total amount of claims filed in your case, plus a commission for the work performed.
    Answer Applies to: Nevada
    Replied: 6/23/2014
    Idaho Bankruptcy Law | Paul Ross
    Yes. But everything left over will come back to you.
    Answer Applies to: Idaho
    Replied: 6/23/2014
    Russell & Heffner, LLC | Lawrence E. Heffner, Jr.
    You have a duty to report any inheritance to which you may become entitle within 180 days of the filing of your bankruptcy proceeding even if the inheritance has not yet been received. The Trustee will apply the inheritance to the Trustee's commissions and expenses and any indebtedness owed for which claims are filed. If there are excess funds you will be entitled to these amounts.
    Answer Applies to: Maryland
    Replied: 6/23/2014
    Patrick W. Currin, Attorney at Law | Patrick Currin
    The trustee will take what is necessary to pay off the creditors and no more.
    Answer Applies to: California
    Replied: 6/23/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    The trustee can take as much as necessary to pay all of the creditors and the expense of administrating the bankruptcy estate. The balance of the funds should be then returned to you.
    Answer Applies to: California
    Replied: 6/23/2014
    Moore Taylor Law Firm, P.A.
    Moore Taylor Law Firm, P.A. | Jane Downey
    Consult your attorney who probably will say the trustee can take an amount sufficient to pay your creditors in full plus costs, including the trustee's commission and you will get the remainder.
    Answer Applies to: South Carolina
    Replied: 6/23/2014
    The Law Offices of Deborah Ann Stencel | Deborah A. Stencel
    If the question is whether the trustee CAN take the money, the answer is yes in most circumstances. If the question is will you lose the entire inheritance, the answer is that you would receive whatever is left over after the debts and trustee's fees have been paid. You should still receive a significant amount of money. You should talk to financial planner on how to protect what you receive and to properly invest it. I?m sorry for your loss.
    Answer Applies to: Wisconsin
    Replied: 6/23/2014
    Law Office of Shawn N. Wright | Shawn N. Wright
    No! The Trustee can only take enough funds to pay off the unsecured creditors in full, in this case. In addition, the Trustee will have some fees and costs on his own, but they shouldn't be significant. Your attorney should file a motion for you to get your money from the inheritance on an expedited basis.
    Answer Applies to: Pennsylvania
    Replied: 6/23/2014
    David Andersen & Associates PC | Jeremy Shephard
    The trustee will pay your creditors in full and take a portion for his/her fees. The excess will be turned over to you. Be sure to contact your attorney so they can update your petition for inheritance and contact the trustee.
    Answer Applies to: Michigan
    Replied: 6/23/2014
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    No but it will pay all creditors that file a proof of claim. You need to get to an attorney to figure it out.
    Answer Applies to: Florida
    Replied: 6/23/2014
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