On Dec. 9, in In re McKay , the Bankruptcy Court for the Middle District of Florida addressed the setoff and recoupment rights of the estates of a debtor’s deceased parents. The decedents’ estates also sought relief from the automatic stay in order to withhold inheritance and other income from the debtor until such a time as the debtor repaid his debts to the estates.
The court held that the mother’s estate was not entitled to setoff or recoupment based on when the debts were incurred, but that the father’s estate was entitled to setoff through a pre-determined payment plan agreed upon before the debtor filed for bankruptcy. Both estates were denied relief from the automatic stay.
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