In California, many people suffered economically in recent years. Some, despite the fact that they were able to maintain employment, found that they had difficulty making end's meet. Some of those individuals sought the protections of a Chapter 13 bankruptcy.
Those that have filed for a Chapter 13 bankruptcy in California, or are considering such action, may find one recent case interesting. According to the report, a couple filed for a bankruptcy. After the filing, but before the matter had been concluded, the couple inherited money as a result of the death of a relative.
The trustee of the bankruptcy acted to take some or all of that inheritance to be used to repay creditors. The couple objected and a lawsuit was filed. However, the court sided with the trustee and held that the money that was obtained could be used as a part of the Chapter 13 bankruptcy filing, thus the trustee could have what was needed for repayment.
Though the court's decision ended with the couple having to use inheritance money in this unique Chapter 13 bankruptcy case, there remains good news for those in California who seek aid through bankruptcy. Chapter 13 bankruptcy filings include the ability to keep much of the property that was owned at the time of the filing. However, it is important for those who are considering taking such an action to seek to understand the process as much as possible prior to filing. This effort could pay off through the reaching of financially stability and the ability for individuals to restart their economic and personal lives.
Source: Bloomberg Law, Debtors' Inheritance Received Before Ch. 13 Case Closed Is Property of Bankruptcy Estate, Diane Davis, Nov. 5, 2013