Giving and receiving gifts are common ways for friends and loved ones to celebrate important occasions and honor one another. Unfortunately, during a bankruptcy case, this well-intended custom between caring individuals can have unintended consequences. Here are some considerations regarding getting gifts during your bankruptcy:

While receiving a present may seem unremarkable to the recipient, during bankruptcy anything the debtor receives must be disclosed to the court. This also applies to gifts which you were given during the six months before you filed for bankruptcy.  For a Chapter 7 debtor who must submit to the “means test” to file under this chapter, all assets, including gifts, must be disclosed to the court. Further, any gifts will also be counted when the court looks at a Chapter 13 debtor’s ability to pay their debts.

In some circumstances getting a gift after filing for bankruptcy may not impact your case. However, if you were already scheduled to receive the gift before filing, the trustee may consider it as part of your bankruptcy estate. The same is true for any pending tax refunds or other money owed to you or cash gifts or inheritances given within 180 days of the bankruptcy. These funds could be taken to pay your creditors. However, there are ways to protect your assets in this situation and to amend your court filings to fully disclose their addition to your bankruptcy estate. 

Ideally, you will not receive any significant gifts six months before, during, or after your bankruptcy. The less financial activity in your bankruptcy estate, the better. When a gift is going to part of the picture, it is critical that you disclose its existence to the court and consult with experienced counsel about how to protect your gift in connection with your bankruptcy case. Contact your attorney as soon as you know about a possible gift so you can plan the best court of action. We the have experience and knowledge you need to enable you to avoid problems with gifts during your bankruptcy. Please contact us online or by phone at   517-459-9518  if we may be of assistance.