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Inheritance before filing and spending down

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    Inheritance before filing and spending down

    We were able to get through 2020 without filing and I'm now looking at getting a small inheritance in the next 60 days. I realize I can payoff some debt or possible fully fund an IRA for myself for 2020 and 2021 but not sure if I can get away with funding my husband. That would amount to 14,000 each. We don't currently have any retirement set aside and neither of us have jobs that offer a 401(k). The house needs a new furnace/ac, windows, front porch, trees removed, driveway repair and new flooring. Husband needs hearing aids and neither of us have been to the dentist in years.

    My goal is to put off filing for as long as I can but eventually I think someone is going to come after me. I have not paid my mortgage in two years, litigation is still pending on that mess.

    Does this sound reasonable to the experienced of the board?

    There's nothing wrong with bankruptcy pre-planning. Nothing wrong with deferred medical items like dentistry, hearing, vision, etc. There's nothing wrong with doing home repairs. An inquisitive Chapter 7 Trustee may poke into additions and upgrades that are not for the health and safety of the family.

    I can't answer any question as to whether an inheritance, received before filing bankruptcy and within the lookback, would be considered income. That could be a major issue for a Chapter 7, and may be district/State specific. (That question popped into my head!)

    Care should be taken as to what debt is paid off. Paying off secured creditors is usually not considered a preference, but paying off friends, family, business associates is likely the worse as they are insiders. Paying off other unsecured debt shortly before filing will likely cause a Chapter 7 Trustee to claw back the payments; so it would just be a waste of time anyhow.

    If a debtor is going to do bankruptcy pre-planning, then the debtor should consult with several bankruptcy attorneys before taking any action where they are buying, selling, or transferring property (including money). A debtor should not give the appearance that the debtor is hiding, delaying, or defrauding creditors or attempt to move property outside the reach of the bankruptcy estate/trustee.

    If you do make repairs or finally visit the doctor, just keep good records as well as explanation. You are asking the right questions.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    I am not an attorney. Any advice provided is not legal advice.


      Thank you justbroke! We qualify for a Chapter 7 but have too much home equity here in GA so Chapter 13 it is. Looks like Covid has slowed down debt collection lawsuits somewhat but not sure how long that will last.


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