Future After Bankruptcy

One important feature of filing bankruptcy is that any money or property acquired after the date the bankruptcy petition is not part of the bankruptcy estate. As soon as a bankruptcy petition is filed the debtor can begin a new business, buy new assets, deposit funds in his bank account, and receive gifts and awards. An example I and other attorneys use to illustrate this point is the hypothetical situation of a person who files Chapter 7 bankruptcy during the week and then wins the lottery the following weekend. This lucky debtor would be both bankruptcy and a millionaire because his lottery winnings occured after the filing date. Of course, most people dismiss this example as an exaggeration.

But, is this example impossible. No !. Consider the following newspaper report of a Chapter 7 bankruptcy debtor from New York who this month hit the lottery soon after filing his bankruptcy petition...

NOVEMBER 22--Last Friday afternoon, a bankruptcy court trustee reported that Juan Rodriguez was broke and unable to pay a dime to any of his creditors, to whom the New York man owed a total of nearly $45,000. Hours later, the 49-year-old parking lot attendant, whose savings account contained 78 cents, became America's latest megamillionaire, winning a $149 million lottery jackpot. Last month, Rodriguez filed for Chapter 7 bankruptcy protection, listing a variety of credit card debts and a small Internal Revenue service lien, according to the below federal court records. Rodriguez, who earns about $30,000 annually and has worked 20 years for a garage company, also had $50 on hand in addition to his paltry bank account (he has opted for a lump-sum payment of $88 million in Mega Millions cash). On Friday, a formal "report of no distribution" was filed with by a court-appointed trustee who requested that Rodriguez's bankruptcy petition be discharged since he had no means to repay his debts. It is unclear whether that determination may be revisited considering Rodriguez's subsequent change in fortunes