Michigan consumers who are considering filing for bankruptcy may find the process confusing. A consumer recently wondered whether she may spend expected inheritance money during the period before filing for Chapter 13 bankruptcy. She explained her intention to buy a car and have some repairs done to her house.
Bankruptcy laws differ from state to state, but it will have to be determined whether the inherited money forms part of the bankruptcy estate. A bankruptcy attorney will be able to make an assessment according to the unique circumstances of the consumer. An inheritance received prior to bankruptcy or within a specified time following the filing will likely form part of the estate and will be added to the funds that will be used for settling outstanding debts. When a bankruptcy court suspects that the debtor spent unnecessary amounts of money shortly before a bankruptcy filing, they may decide to investigate. If the court determines that money was spent in order to purposefully reduce the available funds for paying debtors, your application to file for bankruptcy may be rejected.