How to Go About Protecting Your Inheritance from Debt Collectors

When your inheritance, or as some would like to refer to it, your estate, becomes public record, collection agencies and a list of creditors might review those records to see who is owing money to them.

When it becomes public record, which means it forms a part of your financial information, your creditors and debt collectors will be able to pick it up once they check your credit profile with the credit bureau.

If you do owe debt and fail to repay your creditors on time, your credit record will be checked, and they will become knowledgeable about your inheritance, should you have one.

In the event you should file for bankruptcy or are sued for payment from a creditor, the best way to protect your assets/ estate, is if you don’t own them, which means selling it, would be the best option to protect it.

Choosing to deposit it in the bank, is the best way to have it seized, which will ensure that it be used for your debt settlement. However, selling your inheritance will allow you the cash flow required to repay your debt voluntarily. Using your inheritance funds to repay and settle your debts, will prevent you from having to appear in court and could also increase your credit rating, thus improving your changes to apply for a future line of credit or loan, when and if you want to.

How to shield your inherited property

Although selling your inheritance from the get-go, might seem like the simplest and safest option to, not only protect your inheritance, but also get the most out of it while settling your debt, some people prefer not to sell it and rather preserve their assets with another purpose in mind.

  • You can disclaim your property – Doing this, you’ll be able to surrender your rights to inheritance and transfer it to one of your descendants. In this case, you should disclaim your property before taking possession thereof, otherwise, you will be held liable for committing fraud.
  • If your inheritance is not on your name yet, those who own it can shield it by placing it in a trust, which includes an arrangement where assets will belong to the trust only and not the beneficiaries.
  • If the inheritance comes in the form of estate or a home, it can be protected from collector’s agencies and creditors by living in it and using it as your private residence.

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