inheritance after filing bankruptcy

Inheritance or windfall after declaring bankruptcy

Question on Quora asked by Ivan Zarate: If a person becomes rich after declaring bankruptcy (e.g., an inheritance or winning a lottery), why don’t they have to pay back their original debt?

Answer given by Victor Fong, Licensed Insolvency Trustee in Toronto, Canada:

The idea of bankruptcy is for a person to get a fresh start in life so she can become a productive citizen and contribute to society without being burdened by overwhelming debt.

With that being said, in Canada, if you acquire property (like an inheritance or some other windfall) between the time you file for personal bankruptcy and the date of your discharge from bankruptcy, the trustee seizes it from you for the benefit of your creditors. If the amount of your windfall is more than what you owed to your creditors, the trustee would keep enough of it to pay all your creditors and his fees and would return the excess to you.

On the other hand, if you receive that windfall after your discharge from bankruptcy and the conditions for you receiving that windfall didn’t exist until after your discharge, then you keep it.