You might not think bankruptcy and lottery can be used in the same sentence, but it happens more often than you’d imagine. There are numerous cases when lottery winners file for bankruptcy not too long after the draw due to poor investment choices, uncontrolled lending and many other factors that contribute to losing the fortune. You can read more about them here: https://www.thebklawyers.com/lottery-jackpot-bankruptcy-attorney-san-diego/
However, there’s also the case of people who already filed winning the lottery. It might be a rare case but not completely unheard of.
But when it does, are they allowed to keep it?
That depends on whether they purchased the ticket before or after the filing.
When filing for Chapter 7, you have to disclose all the assets you own, including the future ones, for example, an inheritance. Everything other than the exempt assets belong to the bankruptcy estate that the trustee uses to pay the creditors.
How Can Timing Help You Keep Your Lottery Win
To answer the main question in the title, you have to learn whether your lottery win belongs to the bankruptcy estate. The time of the purchase plays a significant role, as holding a ticket means you are entitled to future assets, in this case a lottery win. The date of the draw does not play any role, just the purchase of the winning ticket.
After Winning the Lottery
If you purchased the ticket and found out that you won before filing for bankruptcy, the winnings belong to the bankruptcy estate and have to be turned over to the trustee. You may be able to keep some of the wining as an exempt. If you owned the ticket when you filed for bankruptcy or if you are expecting future payments due to a previous lottery win, you have to disclose all of these payments to the trustee.
After Buying the Ticket and Before the Draw
If you file for bankruptcy after buying a lotto ticket and before the draw, any winnings still belong to the bankruptcy estate since the ticket was in your possession at the time of filing. So, if you own a lottery ticket when you file for bankruptcy you are in obligation to disclose the ticket to the court. This makes the tickets and any winning you are entitled to a part of the bankruptcy estate.
Buying a Winning Ticket after Filing
When filing for Chapter 7 bankruptcy, your bankruptcy estate is determined according to the assets you own at the time of filing. Therefore, if you bought the ticket after filing for bankruptcy and did not purchase the ticket through any hidden assets, you are entitled to the entirety of the winnings.
If you need a reputable bankruptcy attorney contact The Bankruptcy Lawyers Chang & Diamond, APC at:
12170 Tech Center Dr, Poway, CA 92064, USA