Inheriting money, how long to wait to file

[HHM]

Keep in mind, the attorney is not going to get very specific on this issue, if you think the attorney is going to tell you at an initial consulation that you can do, x,y,z, think again.

The basic answer is this. If you don't want the trustee getting it, you must spend it, and you CANNOT give it away, and you CANNOT use it to pay back debt TO ANYONE.

Good luck.

[Goodgrief]

Thanks, I am indeed trying to get my ducks in a row so this goes as smooth as possible. I don't want to end up like some of the poor soles on here who did no research, jumped in head first and got their butts handed to them by the system.

I have read most of the threads on here, as I have been lurking for about a month. With that said, I understand the paying the parents before a discharge is a no no. I guess I was confused on the what the exact time frame the BK paper work and the trustee asks for. I will not lie, as I don't think I would enjoy be charged with fraud.

With that said, I am just trying to be as best prepared as I can. If you know the rules you have a better chance of not having your arse handed to you. I have read a few people on here who got decimated by the trustee, because " I didn't know that". Well that isn't an excuse, they should have known that, especially with resources like this forum at their disposal. A little common sense goes a long way in life.

We were in pretty dire straights before this little windfall, but with our accrued medical $50k and CC of 35k, a deficiency on our home of about 15k, and a few others. As with most we were in fine shape both employed making around 125k, living the amercian dream. We had very little debt perfect credit. Then the baby came and I quit my job to take care of him. My husband was laid off from GM 6 months ago, so we knew a Ch 7 was in our future. The 25k we are going to get will definately help, but by no means will even make a dent in our problems.

Again thanks for all the help and support, I was just hoping to get the exact wording people's trustees asked them on monies received. I will post the answer from my attorney when I talk to him/her later this week.

[StartingOver08]

You might want to look at the actual petition to get an idea of the exact wording. The Trustee verifies the filing by asking questions, most of the time just identity type questions etc (search in the forum for Trustee questions).

See petition: http://www.uscourts.gov/bkforms/bank....html#official

[ShouldWeFile]

Keep in mind, the attorney is not going to get very specific on this issue, if you think the attorney is going to tell you at an initial consulation that you can do, x,y,z, think again.

The basic answer is this. If you don't want the trustee getting it, you must spend it, and you CANNOT give it away, and you CANNOT use it to pay back debt TO ANYONE.

Good luck.

This is what I was thinking, an intelligent attorney will not be giving you specific direction on how to spend it wisely without having you retain him or her first.

IMHO, retaining an attorney with the intent to file BK somewhat limits your options on what to do with the monies. The reason I feel this way is that it creates the date at which you first consulted an attorney regarding declaring yourself insolvent. I am sure this date would come out if for some reason it was pursued by the trustee. Perhaps I am reading too much into it, but who knows really - stranger things have happened.

If I were in your shoes, I would analyze if it is feasible to wait (a minimum of a year from receipt and expenditure of the $25k before actually filing), then proceed from there. The downside to waiting is that this might involve attending court cases for suits against you, etc. Also, keep in mind your financial situation could change for the better in that time. So it may not be feasible to wait. At that point you must retain an attorney and follow his or her specific direction on how to utilize those monies.

As far as paying your parents back the $10k, that could be viewed as a preferential payment, so you will likely have to wait a minimum of six months after paying them also.

Good Luck...

[HHM]

IMHO, retaining an attorney with the intent to file BK somewhat limits your options on what to do with the monies. The reason I feel this way is that it creates the date at which you first consulted an attorney regarding declaring yourself insolvent. I am sure this date would come out if for some reason it was pursued by the trustee. Perhaps I am reading too much into it, but who knows really - stranger things have happened.

That issue is overblown and has been dealt with, the bankruptcy code does not override attorney client privilege and the type of advice an attorney can give. Not speaking to an attorney is a sure fire way to run into problems.

[fltoo]

Exactly HHM. Worst advice is not to see attorney.

btw, pref payments have a one year lookback, not 6 months.

[Goodgrief]

Thanks, you people are great.
I talked to the parents and explained the situation. They are perfectly fine as they are sound financial condition. I just didn't know what my options were and wanted to get my proverbial ducks in a row. I have heard on here that if you ask 10 lawyers 1 question you usually get at least 6 different answers and sometimes 11 different answers .

As much as I welcome the windfall of 25k, it really put a monkey wrench in our plans. It wasn't near enough to clear up our problems. Not that I am looking a gift horse in the mouth, its just like putting a band aid on a broken arm. I kind of wish we weren't even going to get it, as we could proceed with ch7 and get it all over with. All it is really doing is prolonging the inevitable and the agony.

I have a call into an attorney today and if she calls back I will let you know what she says. In the mean time I will sift through the petitions and see what the exact wording is. All I am trying to find out is what time frame the trustee looks back to.

Again thanks for all the help

[queenfluff]

ok queeny, I don't think you followed . To me "x" s an unkown variable. I am simply asking what is x equal to. 3 months, 6 months, 1 year. As I said I DON'T want to lie(and won't). I need to know what x is so I don't lie.

If the paper work says "have you gotten any money in the last "6" months", then I wouldn't be lieing if I waited 6.5 months. So x would equal 6. (sorry for the algebra lesson). I don't have a bank account, so i can't cash the check. I need my parents to do that.

I will contact a lawyer this week to find out exactly what is legal and not in my area. I was just trying to see if anybody knew for sure, or had a similiar situation.

Again thanks for your help

Keepmine, Thanks for the help, Do I need to have receipts to show where the money went?

Sorry if I misunderstood your post. You didnt mention what the rest of your situation was (I see now by reading the after posts) so to me it sounded like you were trying to see it was OK that your parents kept your inhertiance while doing bankrutpcy. I was just trying to advise you the dangers of doing that and to not tell them everything about your financial situation.

I apologize again for my misunderstanding you. I wish you Good Luck and I hope you figure it out.

[Goodgrief]

Sorry if I misunderstood your post.
I apologize again for my misunderstanding you. I wish you Good Luck and I hope you figure it out.

Oh no, you were fine. I appreciate the input.

I talked to the lawyer today, She told me that "X" = 1 year. And she concurred with most of you that preffered payment to parents is a no no. she is checking if there is any loopholes in our district to get around this.

If I do have to wait a year, then let it be. Maybe I can see if the creditors will settle for less. Unfortunately I have not been late on my cards yet and what I have read they don't deal till you have been late for at least 90 days.

Well I guess this wraps this subject up. Thanks for all your input.

[fltoo]

I advocate settling when it makes sense. But, honestly, please don't settle in your situation. Makes no sense. Use the money wisely to live on, pay your bills and wait out the time period.

I think waiting one year to spend down the money is overkill, so I would definitely get a couple more opinions. Do some free consults with attorneys and ask that question.

In any event, don't let the creditors bothering you force you to file too early.
They can be handled.

[Brighterdays]

I advocate settling when it makes sense. But, honestly, please don't settle in your situation. Makes no sense. Use the money wisely to live on, pay your bills and wait out the time period.

I think waiting one year to spend down the money is overkill, so I would definitely get a couple more opinions. Do some free consults with attorneys and ask that question.

In any event, don't let the creditors bothering you force you to file too early.
They can be handled.

I concur with fltoo. Makes perfect sense to wait it out. Unless they all settle for 25k wich I seriously doubt.

Question: If they do settle, are you liable to pay tax on the forgiven amount. like say you owe 75k and they settle for 25k. do you pay taxes on the 50k that was forgiven?

[ShouldWeFile]

Question: If they do settle, are you liable to pay tax on the forgiven amount. like say you owe 75k and they settle for 25k. do you pay taxes on the 50k that was forgiven?

Yes, if the creditor that the debtor settled with issues a 1099 for the amount the debt was reduced (most will), then obviously the debtor will be liable for the appropriate taxes...

[Brighterdays]

Yes, if the creditor that the debtor settled with issues a 1099 for the amount the debt was reduced (most will), then obviously the debtor will be liable for the appropriate taxes...

Bastardos, They get you coming and going. Well in most cases that makes Bk a lot more attractive.