One of the major concerns that most people have when they begin to consider whether or not they should file a Chapter 13 Bankruptcy is what will happen to their property. Will it be taken from them or will they be able to keep it? But what most do not consider is the property that they may acquire after they have already filed their bankruptcy. It can easily be assumed that all property you own at the time you file your Chapter 13 Bankruptcy will be part of your bankruptcy estate. But what if you inherit property or are the victim in a car accident in which you have the right to file a lawsuit after filing?
First and foremost, there is a duty in a Chapter 13 to update your schedules when you acquire new assets until your Chapter 13 Plan is completed. This rule applies to property you acquire pre-confirmation as well as property acquired post-confirmation. Luckily, not every little piece of property you acquire post-confirmation requires you to update your schedules. It is suggested that only major ones require disclosure.
As a general rule, the following post-petition acquired types of property will always be considered to be a part of your bankruptcy estate and require disclosure to your Chapter 13 Trustee:
Causes of action: causes of action arising from a car accident, slip and fall incident, and the like must all be disclosed to your Chapter 13 Trustee. If you fail to disclose a cause of action by amending your bankruptcy schedules, you can be prevented from being able to pursue the cause action on the basis of judicial estoppel. In other words, you cannot pursue a cause of action in one court while at the same time telling the bankruptcy court you have no causes of action. However, the Chapter 13 Trustee may still be able to pursue the cause of action on your behalf.
Inherited property: property that is inherited even after 180 days after filing your bankruptcy petition will be considered a part of your bankruptcy estate. This even includes an inherited 401(k).
Life Insurance Proceeds: even if acquired more than 180 days after the Chapter 13 bankruptcy was filed.
Winning the lottery- winning the lottery has been considered a post-petition windfall and must be disclosed.
Proceeds received from refinancing or selling real property.
Withdrawals from a retirement account: even though most types of retirement accounts can be fully exempted in a Chapter 13 Bankruptcy, as soon as you withdrawal any of those funds, those funds lose their exempt status and are considered to be income.
If your Chapter 13 is post-confirmation, and you have ot might be acquiring new property, it is very important to consult with an experienced bankruptcy attorney immediately. In specific circumstances, a motion might be able to be filed asking the court to allow you to keep the post-confirmation acquired asset. Contact the Law Office of David M. Goldman, PLLC today to discuss your set of circumstances today.