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Assets acquired after filing under Chapter 7, such as wages, can’t be reached by the trustee. But watch out for proceeds, rents and profits.

After-Acquired Property Is USUALLY Not Property of the Estate

Your filing of a Chapter 7 “straight bankruptcy” case creates a bright red line of timing. What you own at that moment of filing is potentially accessible to the Chapter 7 trustee to pay your creditors. It’s “property of the bankruptcy estate.” What you acquire later is not.

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The 180-day rule applicable to life insurance proceeds also applies to death benefits overall. Death benefits may also often be exempt.


Our last two blog posts have been about inheritances and life insurance proceeds. Death benefits work the same in a Chapter 7 “straight bankruptcy” case. That is:

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The 180-day rule applies to life insurance proceeds in a Chapter 7 case. But life insurance proceeds are often exempt, or protected.

Last time, we explained the 180-day rule about inheritances. If within 180 days after you file bankruptcy you “acquire or become entitled to acquire” an inheritance, then the property being inherited is “property of your bankruptcy estate.” It’s counted as if it was your property at the time you filed, even though it wasn’t. (See Section 541(a)(5)(A) of the Bankruptcy Code.)

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If you are expecting an inheritance, or even if you are not, the special rules about them are worth your attention to prevent bad surprises.


Most people thinking about filing bankruptcy aren’t expecting an inheritance.

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If you are the beneficiary in a spendthrift trust, most likely a bankruptcy trustee can’t touch whatever property is in that trust.

Power of Attorney vs. Spendthrift Trust

Our last blog post focused on your rights under a power of attorney over someone else’s property. A conventional power of attorney commonly requires you to use that property only for another person’s benefit. If so, then your legal control over that property isn’t enough to make that property yours for bankruptcy purposes. So if you file a Chapter 7 case the bankruptcy trustee has no power of that property. It is not included in the property of your bankruptcy estate. (Section 541(b)(1) of the U.S. Bankruptcy Code.)

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