The typical Chapter 7 case lasts about 5 or 6 months start to finish.  However, your receipt of a Discharge Order does not necessarily mean that you are completely finished with your bankruptcy.

Section 541(a)(5) of the Bankruptcy Code provides that your trustee has the power to reopen your case to claim:

Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date.

(A) by bequest, devise, or inheritance;

(B) as a result of a property settlement agreement with the debtor’s spouse, or of an interlocutory or final divorce decree; or

(C) as a beneficiary of a life insurance policy or of a death benefit plan.

In other words, if you inherit money, receive an insurance payout or receive a property settlement from a divorce,  you have to report such a “windfall” to the trustee, who will then reopen your case, seize the newly acquired property and distribute it to creditors.

This is why you should discuss with your lawyer the possibility that you might be coming into money within the 6 months after your case is closed.  If you think this might be the case, you may be able to engage in pre-bankruptcy planning to protect these funds.  For example, if you have an elderly parent who is likely to remember you in his will, you might suggest that your parent speak to an estate planning lawyer about setting up a trust or otherwise avoiding a cash distribution to you.

What About Other Favorable Changes to my Financial Situation After Discharge

Generally your trustee would not have any claim on assets or income that you acquire after filing,  unless you intentionally withheld information about such an asset when you filed.  If you foresee this type of scenario, you should discuss with your lawyer as soon as you are aware of the possibility.


Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need bankruptcy protection. Call him at 770-393-4985 for a confidential discussion.

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