Receiving a Windfall While Bankrupt

A “Windfall” is something that you become entitled to after you file personal bankruptcy, but before you receive your discharge from bankruptcy.  

Windfalls include:

• lottery winnings;

• inheritances; or

• the payout from an insurance policy.

Any assets or property that you receive or become entitled to receive, before your discharge from bankruptcy, can be seized by the trustee and distributed to your creditors. As a bankrupt, you must report any windfalls to your trustee and failure to do so could cause difficulties in obtaining your discharge from bankruptcy or even after you have received your discharge.

If a windfall is more than what you owe, your bankruptcy trustee will pay all of your creditors, plus interest at 5%, and then return the surplus amount to you.

If there is a possibility that you may become entitled to an inheritance or insurance payout while you are bankrupt, you should discuss this with the trustee before filing. A consumer proposal could be a better option in such a situation.  

It may also be prudent to discuss your intention to file for bankruptcy with the person who has named you as a beneficiary in a will or insurance policy. They may wish to change their will, or insurance policy before you file personal bankruptcy.

Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of major financial stress; 

• You won’t be stuck in an assembly line process. 

• You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.  

• We will review your debt solution options, including filing a consumer proposal or personal bankruptcy. 

• We help Canadians with overwhelming debt get fresh financial starts.  

Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.  

We offer free consultations to review your financial situation and practical debt resolution options. Contact us to discuss your situation over the phone, a video chat, or in-person in Saint John, Moncton, Fredericton, Charlottetown, Dartmouth, or Miramichi.