Persons in Garnerville or Rockland, New York, who file personal bankruptcy under either Chapter 7 or Chapter 13 may find themselves in the position of temporarily needing some financial assistance from relatives such as parents. Experienced bankruptcy attorneys can advise clients as to the ins and outs of receiving such aid without creating additional difficulties.
Generally gifts received from others after a bankruptcy filing will not be subject to the claims of creditors, but there are a few exceptions to be aware of. One is that an inheritance that is received because a parent or someone else dies within six months of the date of the bankruptcy filing can be used to pay creditors’ claims. This is intended to discourage those who know that a parent is in ill health or dying from filing bankruptcy just before a death in an attempt to safeguard their future inheritance.
Money received in a divorce settlement shortly after a bankruptcy petition will also be subject to creditors’ claims for similar reasons. Another thing to be cautious about with regard to finances and parents is to avoid having your name added to their bank account. The problem is that when two people have a joint bank account, the funds in it belong to both of them and are subject to the claims of each of their creditors, including claims in a bankruptcy.
Some parents want to put their adult child’s name as a joint owner on their bank account so that their son or daughter can handle their finances if they become incapacitated. A better way to handle the matter, however, is to have the parent name their child their agent in a power of attorney document, empowering them to handle their finances in the event of disability. That way, the funds in the account do not become the son or daughter’s property, susceptible to their creditors’ claims.
Source: FoxBusiness.com, “Don’t Share Accounts with Elderly Parents” Sally Herigstad, Sep. 11, 2013