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  1. #1
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    Feb 2007
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    Question Chapter 13 Bankruptcy, Inheritance and Lotto/Sweepstakes Wins

    Have some unique questions for you all and hope you can offer some insights. We have a Florida Chapt. 13 filed in April '05 and having mostly unsecured cc and medical creditors and IRS debts from long past due years taxes in it. We have been always current on payments, scheduled to end in '09 and I've got a couple unusual questions please...

    1. Inheritance - my grandmother just died and we were willed a 1/4 share in the eventual sale of a rental home she has, sharing it among us 4 grandkids. Likely will be in the 40k range or so. What do I do - is this something I tell trustee or tell my BK lawyer? If it's going to be a problem, is there a way to set-up the incoming payment to go into a 401k, IRA or similar account so it would be safe there? Any advice is most welcome...

    2. Fertility Treatments - This ties into the question above. We have lost 4 babies in pregnancy and the only hope we have of having a child is with fertility treatments that cost around 10k cash up front, and not covered by insurance. My DW is almost the cut-off age for such treatments, so we REALLY need to do it in the coming year and would love to use that inheritance money to pay for the treatments....

    3. Sweepstakes Prize Wins - In a pleasant series of surprises, I have won several national sweepstakes since December and so far have won about 2k worth of actual products/physical prizes, as well as a grand prize vacation trip win valued at 4k. None allow cash options instead of the prize or trip, and I am just wondering what effects this could have? Obviously the value of prizes will be claimed on my income tax as sweep sponsors issue 1099's, so in addition to my normal stack of 1099's from my clients (self employed freelancer) this year, we'll have the extra "income" showing from the wins. Anything I need to know/do/not do with regards to the winnings? Also, what if I win a new car or large cash prize? (hey, the year is off to an unreal start so far in that area, so who knows!)

    THANKS!!!!

  2. #2
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    Default Re: Chapter 13 Bankruptcy, Inheritance and Lotto/Sweepstakes Wins

    I doubt that you will be able to come up with a way to shelter an inheritance after-the-fact. You should consider informing the trustee of your winnings so that the 1099's and their increase in your income (and tax liability) are not a surprise. As you indicate that you have a bankruptcy lawyer involved in your case, you should discuss these issues with your lawyer.

  3. #3
    Join Date
    Feb 2007
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    4

    Unhappy Re: Chapter 13 Bankruptcy, Inheritance and Lotto/Sweepstakes Wins

    thanks - not the answer I was hoping for of course...

    I was not sure if my BK lawyer was able to legally give advice about anything to do with the inheritance from a conflict-of-interest point of view if there were any way the payment from sale could be changed to impact us less.

    As for the contest wins, while my wife is a standard W-2 employee with regular checks coming in, I am totally self-employed with wildly different income each year and a STACK of 1099's every year, so I'm wondering if by calling the wins to the attention of the trustee will I be calling undo attention to our case? So far, the contact with trustee has been non-existant pretty much - we send the payments every month and got a statement of last years payments recently, but not much else.

    Anyone with any other ideas or experiences, please share - thanks!

  4. #4
    Join Date
    Jul 2006
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    Ohio
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    Default Re: Chapter 13 Bankruptcy, Inheritance and Lotto/Sweepstakes Wins

    I think you're missing the point. BK is for people who can't pay their bills at all or in full because of (fill in the blank). If you inherit money, it stands to reason that you will no longer have as much difficulty paying those bills. It does not stand to reason that your creditors are supposed to ignore the fact that you've got 40k laying around, but don't want to use it to pay bills, when you received the benefit of those credit cards (for example), or those medical services.

    If you hadn't inherited the money, would you have been able to pay for those treatments? Not to be rude, but every person isn't blessed with the opportunity to become bio parents. And, many of those people can't afford expensive treatments. However, you'd like to justify not paying for bills that you've already incurred, and use newly received money to pay for elective treatments. If you were a creditor, how would YOU feel?

  5. #5
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    Feb 2007
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    4

    Default Re: Chapter 13 Bankruptcy, Inheritance and Lotto/Sweepstakes Wins

    Quote Quoting moburkes
    View Post
    Not to be rude, but every person isn't blessed with the opportunity to become bio parents. And, many of those people can't afford expensive treatments. However, you'd like to justify not paying for bills that you've already incurred, and use newly received money to pay for elective treatments.
    Wow, I can't even believe someone could be so cruel as to post that. If you have never had to suffer the unreal heartbreak of losing a child, or in our case, 3 pregnancies and FOUR children over 5 years, including our son who was stillborn prematurely, you have no idea. Imagine being 1000 miles away from home for your baby shower 3/4 of the way through pregnancy and having the bed fill with blood. Imagine a 100 mile ambulance drive to the nearest major hospital. Imagine the feeling of watching your own child being born dead and holding that perfect tiny baby in your arms after. Imagine driving back home after weeks of recovery with the cremated remains of your child in a box instead of wrapped in a baby blanket. Oh yeah, also imagine the unending depression and marital stresses that follow when everyone asks, "oh how is the little mother/father doing?". Just for good measure, add an employer who for 3 years gave nothing but stellar job reviews but is suddenly "uncomfortable" with thier customers asking every single day about your pregnancy and then wanting details of you loss, so they FIRE YOU.

    Welcome to just a little of our world - I would not wish those experiences on anyone and I sure as h*** would not make a comment like yours to someone who had lived this and much more for several years and is TRYING to get thier act together with a chapter 13 rather than taking the quick and easy chapter 7 way out.

    You make it sound like I'm wanting breast implants or a cosmetic face-lift when you say, "elective", but when insurance companies gladly cover expensive bypass operations for the obese and nose jobs for those who fried thier noses out coking through the 80's, but will not pay ANYTHING to help two people who want nothing more in life than to be parents and are facing a biological deadline very soon, it just aint the same.



    I posted my questions hoping to find some advice from others who may have been in a similar position or lawyers who had experience with the subject and not to be judged by anyone. As for many creditors, with the predatory lending and vulture-like collection policies that take small debts and balloon them to unreal heights in short order, I dont "feel" for them at all.

  6. #6
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    Jul 2006
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    Ohio
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    Default Re: Chapter 13 Bankruptcy, Inheritance and Lotto/Sweepstakes Wins

    You have NO IDEA what I've been through. NO IDEA. Period. The reality is that your trustee will NOT say it is okay to pay for elective treatment, but not pay your creditors. You can try not to tell him, if you'd like.

  7. #7
    Join Date
    Nov 2006
    Location
    Texas
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    Default Re: Chapter 13 Bankruptcy, Inheritance and Lotto/Sweepstakes Wins

    IN RE PARKER, Case No. 91-10174 (Bankr. W.D.N.C., Oct. 1992)(J. Hodges) - A Chapter 13 Trustee may require a debtor to modify his Chapter 13 Plan to apply inheritance money to increase the payout to unsecured creditors. Post-confirmation modification to increase the amount paid to a particular class of creditors is permissible when 1) the debtor's change in financial circumstances is substantial enough to justify the modification, and 2) the changed circumstances are not those that could have been anticipated at the time the Chapter 13 Plan was confirmed.

    IN RE VORE, Case No. A-B-86-10331 (Bankr. W.D.N.C., July 10, 1990)(J. Wooten) - In an agreed order, the court granted the Chapter 13 Trustee's motion to apply the debtor's $27,000 inheritance to the plan because it was property of the estate under 11 U.S.C. 1301(a)(1), and under the Chapter 7 analysis required in 11 U.S.C. 1325(a)(4) the debtor's unsecured creditors were entitled to be paid 80% of their claims. The inheritance was received more than four years after confirmation of the plan that had originally provided for a payout to unsecured creditors of approximately 35%.

  8. #8
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    Default Re: Chapter 13 Bankruptcy, Inheritance and Lotto/Sweepstakes Wins

    Quote Quoting Just Breath
    View Post
    IN RE PARKER, Case No. 91-10174 (Bankr. W.D.N.C., Oct. 1992)(J. Hodges) - A Chapter 13 Trustee may require a debtor to modify his Chapter 13 Plan to apply inheritance money to increase the payout to unsecured creditors. Post-confirmation modification to increase the amount paid to a particular class of creditors is permissible when 1) the debtor's change in financial circumstances is substantial enough to justify the modification, and 2) the changed circumstances are not those that could have been anticipated at the time the Chapter 13 Plan was confirmed.

    IN RE VORE, Case No. A-B-86-10331 (Bankr. W.D.N.C., July 10, 1990)(J. Wooten) - In an agreed order, the court granted the Chapter 13 Trustee's motion to apply the debtor's $27,000 inheritance to the plan because it was property of the estate under 11 U.S.C. 1301(a)(1), and under the Chapter 7 analysis required in 11 U.S.C. 1325(a)(4) the debtor's unsecured creditors were entitled to be paid 80% of their claims. The inheritance was received more than four years after confirmation of the plan that had originally provided for a payout to unsecured creditors of approximately 35%.
    Thanks for providing that information.

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