Filing for bankruptcy can bring much-needed financial relief, but what happens if you unexpectedly inherit money after your case is already underway? Many Louisiana residents worry that an inheritance could undo the protection bankruptcy provides. The answer depends on timing, the type of bankruptcy filed, and how Louisiana bankruptcy rules apply to inherited assets.

Below is a clear breakdown of what to expect and why getting legal guidance early matters.

Understanding the 180-Day Inheritance Rule

Under federal bankruptcy law, inheritances are treated differently depending on when they are received. If you become entitled to an inheritance within 180 days after filing for bankruptcy, that inheritance may be considered part of the bankruptcy estate.

This applies even if you do not physically receive the money during that period. If the person who left the inheritance passes away within 180 days of your filing date, the asset may need to be disclosed to the court.

How Inheritances Affect Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, non-exempt assets can be used to repay creditors. If you inherit money within the 180-day window, the bankruptcy

trustee may be able to claim some or all of it, depending on available exemptions.

Louisiana exemption laws may protect certain assets, but cash inheritances are often more vulnerable. If the inheritance exceeds what exemptions allow, the trustee could use the funds to pay creditors before your remaining debts are discharged.

How Inheritances Affect Chapter 13 Bankruptcy

Chapter 13 bankruptcy works differently. Instead of liquidating assets, you repay debts through a court-approved payment plan. An inheritance received during your repayment period could result in a required plan modification.

This may mean increasing monthly payments or using a portion of the inheritance to pay creditors. Courts generally expect debtors to devote additional disposable income to the repayment plan.

Why Full Disclosure Is Critical

Failing to report an inheritance can lead to serious consequences, including dismissal of your case or allegations of bankruptcy fraud. Even if you are unsure whether an inheritance applies, it is always safer to disclose it and let the court determine how it should be handled.

Transparency protects your bankruptcy case and helps avoid delays or penalties.

How Legal Guidance Can Help Protect Your Bankruptcy Case

Bankruptcy law involves strict deadlines and rules that can significantly impact your financial future. Timing alone can determine whether you keep an inheritance or must share it with creditors.

At Hester Law Firm, we can provide legal assistance to the Louisiana public by helping individuals understand how inheritances interact with bankruptcy filings and how to protect their rights under the law.