Do I need to File Bankruptcy on Inherited Debt in New York City?
We often meet with clients for the first time in New York City that have waited to file bankruptcy because they were worried about how their inherited property would be affected. The concern makes sense, especially if the property is shared with a relative but the truth in most cases is that filing for bankruptcy will protect the majority of inherited assets including real estate and personal property.
The US Bankruptcy Code and the New York State exemptions offer enough protection for most of our clients, but there are legal limits to the amount of property a person can exempt from their bankruptcy. If the property you need to protect is above the legal amount you can exempt than your attorney may recommend a Chapter 13 bankruptcy depending on your situation. This allows you to keep your inherited property, but will also allow you to repay a portion of your toxic debt in a 3-5 year payment plan that could have otherwise been discharged in Chapter 7. You will need to consult with an attorney about your debt scenario and goals for bankruptcy if you have inherited property you need to protect.
Also, if you are contemplating bankruptcy but think there may be a possibility you could fall into an inheritance in the near future, you may have a difficult choice to make about the best time to file. Be careful as well not to return any inherited property or give it to someone else before you file. In the eyes of the Bankruptcy Court in New York City once you own your inherited property it’s yours forever. It doesn’t even matter if you have received an official title transfer. Giving property back or transferring it to someone else could be considered bankruptcy fraud.
The issue of inherited property in bankruptcy can be a bit tricky, but a good bankruptcy attorney will be able to advise you towards a Chapter 7 or Chapter 13 when you consult with them. Have a good idea of the value of your inherited property when meeting with your attorney.
If you live in New York, get the pros and cons of bankruptcy and how it will affect your inherited property from the Law Offices of William Waldner. We will advise you about the best way to both eliminate your toxic debts and protect your inherited assets through filing bankruptcy. Arrange a free consultation online or by calling 212-244-2882. We are a boutique law firm that offers affordable debt relief assistance for all New Yorkers.
This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.