How Does Receiving An Inheritance Impact My Bankruptcy?

How Does Receiving An Inheritance Impact My Bankruptcy?

If you receive an inheritance during or after bankruptcy, its impact on your case will vary depending on the circumstances and time. Let’s take a closer look at how inheriting assets (cash, property, jewelry etc.) can impact your bankruptcy case.


Any inheritance you receive during bankruptcy will immediately become part of your case. But the bankruptcy trustee will decide if the inheritance can be used to repay creditors based on its exemption status.

  • 180 Day Rule – If you receive your inheritance within 180 days after your bankruptcy case is closed or discharged, you must report your windfall to the bankruptcy trustee. Failure to do so could mean legal trouble. The 180-day rule was created to stop debtors from filing bankruptcy in anticipation of receiving an inheritance.
  • Eligibility date.  The timing of your inheritance is determined by when you become eligible to receive the inheritance not when you actually receive it. For example, if your aunt died on April 20, 2015, but you did not receive your inheritance from her until June 5, 2015, the date you were eligible to receive the inheritance would be April 20, 2015.


As mentioned earlier, you can avoid having your inheritance seized by creditors if the inheritance is exempt.  For example, if you received $5,000 worth of jewelry, your bankruptcy attorney could claim that the property is exempt under the bankruptcy rules for your state as long as the exemption for jewelry is at least $5,000.

If you’re expecting an inheritance, don’t hide the fact from your bankruptcy attorney. No matter the size of your inheritance, there may be ways that you can protect some or all of it from creditors even as you receive a discharge in bankruptcy.