Even in the face of mounting debt, most people put off a bankruptcy filing until they simply are unable to do anything else. There are plenty of reasons for this. For most people, filing for Chapter 7 — or even for Chapter 13 bankruptcy — takes an emotional toll: right or wrong, people view bankruptcy as a black mark against them, and a sign of failure. Others may be hoping for some kind of windfall that will help to ease their financial woes. If you are anticipating coming into money and putting off your filing because you’re hoping to get your hands on an inheritance or some other kind of lump sum of cash, it’s important for you to understand the 180-day rule in bankruptcy.

When you file for bankruptcy, one of the first things you’re required to do is to provide the bankruptcy trustee with a comprehensive list of all of your assets and your debts. This includes your home, your vehicle, any jewelry or collectibles, as well as any savings, investments, and the like. The trustee needs this information so that they can determine what can be distributed to your creditors and what is protected and will stay with you.

Though the information you provide is meant to be a snapshot of your financial health, that doesn’t mean that things can’t be added to the list. Specifically, if you receive any money over the next 180 days, that will be added to your list of assets and – if non-exempt – will become available for distribution to pay off your debts.

In most cases the 180-day rule is applied to inheritances, but there are other types of monies that qualify, including:

• Property from a divorce settlement
• A bequest
• Life insurance payouts
• Lottery winnings
• Compensation from a personal injury settlement
• Death benefit payouts

The question of whether you’ll be able to keep a windfall of this type is answered by when you became entitled to receive the money rather than when it is actually in your hands. If that date is within 180 days before or after your filing then the property becomes part of your bankruptcy estate (unless it is exempt). If the monies or property become available more than 180 days after you file for bankruptcy, you are free and clear to keep it, whether it is exempt or not.

If you are considering filing for bankruptcy and there is a possibility that you are going to come into an inheritance or something similar, it is important to let your attorney know about it immediately. They will provide you with guidance on the right way to approach your situation.